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Final Report

Northern Forest Innovation Centre Feasibility Study & Implementation Plan

January 16, 2009

Contents1 Executive Summary.........................................................................................................42 NFIC: Defining a Role......................................................................................................123 Forest Industry and Resource Industry Incubation.........................................................14

3.1 External Expert Interviews......................................................................................143.1.1 General Incubation Insights..............................................................................143.1.2 Forestry Incubation Insights & Best Practices...................................................163.1.3 Finland and Finnish Trade Insights...................................................................19

3.2 Comparator Projects................................................................................................193.2.1 Saskatchewan Forestry Centre, Prince Albert, Saskatchewan..........................193.2.2 nGen: the Niagara Interactive Media Generator, St. Catharines, Ontario..........20

4 Community Perspectives on the NFIC Project.................................................................224.1 Community Consultations Summary.......................................................................224.2 Online Survey..........................................................................................................234.3 Community Stakeholder Interviews.........................................................................254.4 Preliminary Conclusions..........................................................................................27

5 Incubation and the NFIC: Theory, Best Practices and Models.........................................295.1 Language and Role: What is Incubation?.................................................................295.2 Literature Review: Learning from Five Decades of Research...................................30

6 Feasibility Assessment...................................................................................................496.1 Challenges, Threats and Obstacles..........................................................................506.2 Defining a Way Forward..........................................................................................526.3 Development of an Asset Map and Service Cluster.................................................54

7 From Theory to Practice: Describing the Operations of Incubators.................................567.1 Staffing....................................................................................................................567.2 Financing.................................................................................................................577.3 Governance.............................................................................................................62

8 Strategic Directions........................................................................................................658.1 Establish a Common Vision and Mission..................................................................658.2 Establish a Workplan for Incubation........................................................................658.3 Establish an Entrepreneurial Cluster through the NFIC............................................67

9 Implementation & Action Plan........................................................................................699.1 Preliminary Steps....................................................................................................699.2 Preparing the Incubator...........................................................................................69

Northern Forest Innovation Centre Final Report 2 | P a g e

9.3 Staffing....................................................................................................................709.4 Governance.............................................................................................................719.5 Moving from Incubator to Development: Programming the Incubator.....................729.6 Promoting the NFIC.................................................................................................749.7 Financing the Incubator...........................................................................................759.8 Measuring Success..................................................................................................77

10 Appendices.................................................................................................................7810.1 Appendix A – Community Consultation Survey Results...........................................7810.2 Appendix B – Finland and Finnish Trade Insights.....................................................8410.3 Appendix C – Duties of Staff in a Standard Incubator..............................................8710.4 Appendix D – Examples of Programs to be Delivered through and Incubation Program.............................................................................................................................90


1 Executive SummaryIntroduction

The City of Dryden is considering the development of a Northern Forest Innovation Centre (NFIC), capitalizing on the City’s existing strengths and natural resource cluster to deliver focused programs of business development and commercialization, specialized training, and support for new enterprise creation. Much of this work will be achieved through close cooperation with a range of partners including educational institutions, funding organizations and others engaged in entrepreneurship and advancing the development and growth of businesses.

The objectives of the NFIC project are threefold:

1. To make the City of Dryden the destination of choice for business development, entrepreneurship, education and training requirements

2. To provide access to training in order to develop a highly-skilled local talent pool (targeting unemployed, underemployed or displaced workers) that will enhance local investment attraction efforts

3. To attract, develop and support new business creation including value-added forest ventures to the City of Dryden, using a business incubator as a focal point of activity

At its core, the NFIC was viewed as a vehicle for generating new investment and entrepreneurial activity within the community, with a particular (though not exclusive) focus on value-added opportunities in the forest industry. Much of the NFIC’s impetus came from the proposed Two Feathers project, a joint venture between area First Nations and a consortium of forest industry companies based in Finland. Although Two Feathers was not, in and of itself, the raison d’être for the NFIC, it loomed large in the initial understanding of how the NFIC structure could offer value to the community. At the same time, the Two Feathers project was seen as an initial step in a much longer and more comprehensive process.

The NFIC was envisioned as a “hub and spokes” structure, where various external inputs (the spokes) such as finances, experience, marketing, international connections, technology, training and knowledge feed into an internal series of programs (the hub) with the goal of encouraging local projects, enterprise creation and enterprise expansion. In essence, the NFIC could be a one-stop shop for entrepreneurs and interests in the value-added forest sector, but could also grow over time to support a broader range of industries.

The consulting firm of Millier Dickinson Blais was retained to assemble a project team to examine these opportunities in greater detail. The task of the project team


retained to undertake this present study was to examine this vision, and assess the potential feasibility of such an NFIC structure.

Consultations

The project team began its work on this initiative by seeking to identify and study other forest sector and natural resource incubation facilities or initiatives that may exist in other jurisdictions. Although forestry was the preliminary focus of the NFIC process, it was quickly acknowledged that the number of forest-related incubation projects was extremely small, and that resource-focused initiatives might offer parallel insights or best practices for use in the forestry sector. In the end, both kinds of incubation structures proved elusive, with little activity in evidence.

The project work plan called for the project team to conduct 6 to 8 interviews with external experts in areas related to the NFIC or its potential tenant projects and companies, as a part of the overall process to assess feasibility and determine strategic directions. In the end, 10 external experts were interviewed. These consultations fell into three primary areas of discussion:

1. Forest sector incubation insights2. Other resource industry incubation insights3. Finland and Finnish trade insights (given the significant role of the Two

Feathers initiative within the initial NFIC concept)

The project workplan also called for the project team to conduct 6 to 8 interviews with local stakeholders as a part of the community consultation process. Ultimately, 9 local stakeholders were interviewed. In addition, discussions were held with the national incubation associations of both the United States and Canada. The project team’s questions covered three principal areas of interest:

The existence of any other forest industry or natural resource focused incubation facilities in North America

The kinds of support programs that national incubation associations might be able to offer to the NFIC

The nature of any other programs or sources of assistance that might be of value to the NFIC

The interviews explored the nature of existing forest sector incubation programs, with an eye to drawing out lessons and experiences that might prove helpful to the NFIC as it develops its own strategy and approach to value-added forest industry incubation.

In addition, a Community Consultation process took place in early 2008 to garner thoughts and opinions on the forest sector and on incubation opportunities related


to the NFIC concept and its potential support for value-added forest industry activities. Three basic questions were posed during these consultations:

1. What should the regional forest industry look like in ten years? 2. What do we need to do (action steps) to get there?3. Which actions could be led by the NFIC?

The project team also carried out an online survey of local public sector and not-for-profit sector organizations seeking to support local business development, and asked six questions designed to help the team increase knowledge of the local forestry sector, and to gain additional insights into the necessary steps that could be employed to create successful business ventures through the NFIC. Questions centred on the future of the forestry sector, value added opportunities and the role of the NFIC in forestry initiatives.

Consultation Conclusions

In assessing the feasibility of the NFIC concept, a number of conclusions arose from the preliminary research and consultations. These include:

Broad support for the NFIC concept exists within the community While value-added forest opportunities remain a priority for the community,

interest extends to a wider incubation/generation offering to help support new local entrepreneurial venture

A suitable facility has already been identified in the former Weyerhaeuser training facility

Potential tenants have been identified, including Two Feathers, Seven Generations and others

Community support for the project has been mobilized through a series of steering committees and public consultations

Some institutional partners, including the City of Dryden, local First Nations and others, have expressed support for the initiative

However, a series of additional feasibility questions remained. These included:

What exactly is the NFIC: an incubator, generator, accelerator, enterprise centre, etc.? All of these suggestions – and more – arose during research and community consultation.

Does the proposed facility have a clear function and focus for its activities? Can it overcome the likely obstacles in its path in order to fill this function? In

particular, can a forest-focused centre overcome challenges such as lack of access to fibre, and slumping international markets

What kind of staff will be required to operate such a facility, and can it be found in the local labour market?


Given the issues addressed, what are the operating costs of such a facility likely to be, and can this budget be accommodated within potential revenue streams?

How will the facility be legally structured and governed once it is established?

The project team turned its attention to these issues in a more formal research process.

Incubation Research

Broadly speaking, the NFIC is envisioned by most as an “incubation” facility. It is intended, first and foremost, as a centre to spur business-based expansion and private opportunity, leading to job creation, economic development and entrepreneurial viability. Through physical facilities, program delivery or virtual support systems (or often a combination of these of these approaches), they seek to nurture and promote the viability and success of companies participating in the incubation program.

The report discusses a wide range of incubation research and the results of practical incubation fieldwork from across North America. It takes particular acre to draw practical and relevant lessons from this information to help guide the creation of the NFIC. Nevertheless, confusion continues to exist around the different terms within the incubation arena. In 2007, as part of its ongoing work in this field, Millier Dickinson Blais developed the following definitions:

1. Incubation: a series of proactive support programs delivered from either a physical or virtual space designed to enhance the viability of new and emerging businesses within a specific community or sector of economic activity.

2. Acceleration: a series of proactive support programs delivered from either a physical or virtual space designed to fast-track the growth and development of existing small firms with significant market potential, often in a specific economic sector.

3. Generation: a series of proactive support programs delivered from either a physical or virtual space designed to kick-start both businesses and joint public-private projects as part of a larger effort to grow a specific economic sector or anchor the development of an economic cluster.

From this perspective, the project team believes that the ideal positioning (and language) for the NFIC is as a “generator”. This emphasizes the facility’s role in project and sector development over its responsibilities for supporting individual business start-ups, while retaining the functional aspects of more generalized incubation systems and structures.


Research Conclusions

Based on community consultations, and discussions with key stakeholders, it does appear that a common vision is emerging. There are several elements to the emerging consensus. Firstly, it is widely agreed that the primary focus of the NFIC should be on the support and development of new business growth leading to sustainable employment and environmentally responsible enterprises.

It is also acknowledged that while the forestry industry has a strong history in the area and is in need of new approaches to diversification and value added initiatives, this is not the only area in which the NFIC structure can be helpful. This simple declaration masks a host of complexities, but it speaks to the common understanding of an economic development objective that sees the community moving away from past practices and embracing a shift in direction moving the area from low-skill primary jobs into medium and high skill secondary and tertiary jobs. In theory, these secondary and tertiary job types will provide higher average incomes, spur additional opportunities for new venture creation, and widen the range of job prospects and opportunities for local people (including local youth and local First Nations workers).

On the face of it, the shift to a business generation incubator focus, including value-added forest products, is a common sense solution. The challenge comes in providing the necessary inputs to allow these new ventures and projects to emerge and take hold: this is the ideal role for the NFIC.

The NFIC can provide:

A mechanism for delivering appropriate project and business development support to new ventures

An entry-point for external partners bringing new technologies, innovative ideas or joint venture opportunities to enhance local value-added efforts

A facility that will serve as a network hub to bring together diverse and disconnected actors to improve information flow and deal making

A site where sector specific training and appropriate learning facilities may be made available to a wide range of industry actors and would-be actors who might not otherwise be able to access them

A focal point for efforts to address systemic issues and challenges for new ventures

NFIC is better positioned as a traditional incubator, in that its primary function is support and mentorship to new businesses. The NFIC facility is a generator-style incubation program in which resources and support structures are mobilized to strengthen activity within a particular economic sphere or cluster, as a means of driving community-wide economic growth. Like a traditional incubator, this may include a range of business support programs, and also includes a range of


capacity-building, networking, market development and even project management efforts designed to enhance the community’s overall performance in the economy. Due to uncertainty in current forestry related projects and the unavailability of raw materials (fibre) it is unlikely that a forestry cluster can sustain itself as the primary focus of the NFIC. However, a primary focus for the centre should remain as natural resources including energy, mining, environmental industries, ecotourism and forestry as a speciality area of focus.

The project management role is a particularly telling one, as it underlines the notion that a generator is about economic activity and not about businesses activity per se. As demonstrated by the case studies within the report, non-commercial projects may play a significant role in creating cluster effects and centres of excellence, thereby laying the groundwork for future business development opportunities. From this perspective, the NFIC should embrace a role as a generator for new business growth efforts in the Dryden area. This requires a refocusing of the NFIC to broaden its mandate beyond value-added forest industry opportunities into a entrepreneurial “enterprise centre” that provides a one-stop support service and incubation structure to a range of industries, including – but not limited to – the value-added forest sector.

This suggested approach is consistent with other recent economic development research carried out in the community. In 2008, the City of Dryden Economic Development Strategy Implementation Plan was presented by McSweeney & Associates, a firm of management consultants based in Ottawa. Their plan focussed on the following seven strategic areas:

1. Business Environment/Infrastructure Development2. Entrepreneurship and Small Business Support3. Community Preparedness: Community Awareness, Education and Labour

Force Development4. Centre for Exploration and Mining Services5. Renewable Energy6. Agriculture and Agri-foods7. Manufacturing

While most of the components of this Economic Development Strategy focus in other directions, there is strong support for the concept of a business incubator in this report, though not one centred on value-added forest initiatives. Under Strategic Theme #2 of the Economic Development Strategy Implementation Plan (“Entrepreneurship and Small Business Support”) the following action is recommended:

“That the DDC partner with key organizations to establish a full service small business enterprise centre and cooperate with PACE, PARO, Chamber of Commerce, surrounding First Nation communities, and other key community


organizations, to collectively meet the needs of new entrepreneurs and existing small businesses, and to ensure there is no duplication of service.”

Strategic Directions

It will be critical for all partners to seek the approval of the overall program from governing bodies (i.e. Board of Directors, elected Councils, etc.) in order to formally incorporate the development of this incubator centre into their long-term strategic plans and budget processes. Without this explicit recognition, the initiative will be vulnerable to changing political processes and shifting priorities.

The creation of an incubator does not occur immediately; it must be based on a commonly understood workplan and process, with elements phased in as the initiative progresses. The logical flow of this workplan is as follows:

1. Establishment of a Short-Term Incubator Development Plan2. Development of a Full Marketing and Promotional Plan3. Establishment of a Physical Incubator4. Establishment of a Virtual Incubator5. Establishment of a Long-Term Incubator Development Plan

There is strong consensus among the NFIC stakeholders that an incubator is not the sole goal of their partnership. The incubator has a significant role in the execution of the goals but is part of the process to position the Dryden generator as the centre of a strong and growing entrepreneurial cluster. There are five key elements to this cluster, many with an existing presence in the community:

1. Education and Training Institutions/Programs which focuses on skill development, technology transfer and innovation

2. Enablers and Funders who will provide the financial and in-kind support to successfully run the venture

3. Business Support and R&D Networks and Organizations who will be key in developing strong and successful businesses

4. Natural Resource Sector Resources specializing in Forestry Sector Development which will draw from the tremendous history and future of these assets in the area and the bank of already existing resources and experts

5. Technology Based Organizations and Businesses which focus on the development of technical and technological tools that support the business generator

Action Plan

To accomplish these strategic goals, the project team defined a series of specific actions to be pursued:


Action Area One: Preliminary Steps Prepare and submit funding applications to relevant government agencies to

help launch the NFIC’s incubation programs Develop key components of an early marketing message Prepare a formal Business Plan for the proposed NFIC generator

Action Area Two: Preparing the Incubator Prepare the incubator through an analysis of the physical space and the

operating vision for the centre Develop a technology support strategy for the centre to identify and put in

place the necessary technology tools to assist in the facility’s operations Local colleges and training institutions should consider relocation of programs

to the NFIC centre in a manner that supports and enhances the incubation program

Begin planning for the transition to the long-term incubation strategy and program

Action Area Three: Staffing Hire an incubator centre and project manager Hire project officers and centre staff Plan to hire students and part time staff

Action Area Four: Governance Establish a not-for-profit corporation to deliver programs and administer the

incubator Elect a Board of Directors Define a Financial Management structure

Action Area Five: Programming the Incubator Develop an Incubator Tenancy Program Develop a suite of incubation support programs, beginning with a focus on

tenant needs Adapt the physical incubation programs for a virtual environment Establish a business development and financing network Initiate a range of student programs through the incubator Initiate a program to enhance business development and entrepreneurship

linkages in the region Create a program for the natural resource sector (highlighting the forestry

sector) to extend and broaden its links to the industry as a whole, with an emphasis towards increasing opportunities for collaboration

Establish a long-term Incubator Development Plan

Action Area Six: Promoting the NFIC


Develop and deliver a marketing program to bring companies to the incubation program, both physical and virtual

Develop and deliver a marketing effort to make participating companies aware of specific activities with the program

Develop and deliver a marketing effort targeting area students

Action Area Seven: Financing the NFIC Prepare detailed budget estimates for an ongoing incubation facility Build commitment to the concept of stakeholder operating grants Establish key revenue streams to support the incubation operation Establish a strategy for tax minimization

Action Area Eight: Measuring Success Set and review annual benchmarks to determine the success of the incubator

Each of these actions is described in detail in the full report.

2 NFIC: Defining a RoleThe NFIC Steering Committee is made up of a range of local private and public sector partners and interested individuals. In January of 2008, the committee met to review its thoughts on the project, and to discuss options for moving the NFIC concept forward. The committee identified nine potential roles for the NFIC, including:

1. Training, Education Paths & Knowledge Transfer2. Entrepreneurship Support & Building Business Relationships3. Partnerships4. Innovation5. Regional Catalyst for Economic Development & Economic

Diversification


6. Mentorship7. Shared Vision 8. Enhanced Visibility of First Nations9. A formal setting (both physical and virtual) where all these things

happen

At its core, the NFIC was viewed as a vehicle for generating new investment and entrepreneurial activity within the community, with a particular (though not exclusive) focus on value-added opportunities in the forest industry. Much of the NFIC’s impetus came from the proposed Two Feathers project, a joint venture between area First Nations and a consortium of forest industry companies based in Finland. Although Two Feathers was not, in and of itself, the raison d’être for the NFIC, it loomed large in the Board’s initial understanding of how the NFIC structure could offer value to the community. At the same time, the Two Feathers project was seen as an initial step in a much longer and more comprehensive process.

All of the current members of the steering committee were considered logical partners for a Board of Directors in moving the project forward. Most felt that – depending upon the final configuration of the project – there could also be other forms of direct support from their organizations (including, in some instances, financial support) for the project as it moves forward. Some of these Board members (especially government-linked groups) felt that they might be best positioned as ex officio (non-voting) members. The School Board was not sure of its involvement.

Other possible members of a Board not presently involved in the steering committee included:

HRSDC PACE The private sector Additional First Nations interests, including (possibly) Pikangikum First Nation Other regional municipalities The Northwest Business Centre

Some partners were uncomfortable with the term “incubator”, seeing it as limiting in scope, and felt that terms like “generator” or “accelerator” were seen as more appropriate, particularly as the ultimate goal of the NFIC was seen to be about nurturing new business creation and building new opportunities for the natural resource sector. The NFIC was described as a “hub and spokes” structure, where various external inputs (the spokes) such as finances, experience, marketing, international connections, technology, training and knowledge feed into an internal series of programs (the hub) with the goal of encouraging projects, enterprise creation and enterprise expansion. In essence, the NFIC should be a catalyst for


enterprise development and enterprise creation, and a “one-stop shop” for entrepreneurs and interests in the value-added forest sector, but could also grow over time to support a broader range of industries.

The task of the project team retained to undertake this present study was to examine this vision, and assess the potential feasibility of such an NFIC structure. Should it appear to be feasible, as second task was to develop a detailed implementation and action plant o help make it a reality.

3 Forest Industry and Resource Industry IncubationThe project team began its work on this initiative by seeking to identify and study other forest sector and natural resource incubation facilities or initiatives that may exist in other jurisdictions. Although forestry was the preliminary focus of the NFIC process, it was quickly acknowledged that the number of forest-related incubation projects was likely extremely small, and that resource-focused initiatives might offer parallel insights or best practices for use in the forestry sector. In the end, both


kinds of incubation structures proved elusive, with little activity in evidence. This chapter summarizes the results of this research.

3.1 External Expert InterviewsThe project work plan called for the project team to conduct 6 to 8 interviews with external experts in areas related to the NFIC or its potential tenant projects and companies, as a part of the overall process to assess feasibility and determine strategic directions. In the end, 10 external experts have been interviewed, with a select number of additional consultations planned. Those interviewed to date include:

Jean Bridge, nGen: the Niagara Interactive Media Generator Tom Corr, Waterloo Technology Park Accelerator Joyce Dearstyne, Framing our Community Inc. in the Nez Perce National

Forest Michael Donahue, Canadian Association of Business Incubation and Toronto

Business Development Centre Lynn Jungwirth, Jefferson State Forest Products Linda Knopp, National Business Incubation Association Henry Koivukangas, Oulu Region Business Development Agency (Finland) Greg McCandless, the Scandic Group Johan Nyman, Canadian Embassy to Finland Rob Woodward, Saskatchewan Forest Centre

These consultations have fallen into three primary areas of discussion:

4. Forest sector incubation insights5. Other resource industry incubation insights6. Finland and Finnish trade insights (given the significant role of the Two

Feathers initiative within the initial NFIC concept)

Discussion of each of these areas of interest follows.

3.1.1General Incubation InsightsFor this portion of the research process discussions were held with the national incubation associations of both the United States and Canada. The project team’s questions covered three principal areas of interest:

The existence of any other forest industry or natural resource focused incubation facilities in North America

The kinds of support programs that national incubation associations might be able to offer to the NFIC

The nature of any other programs or sources of assistance that might be of value to the NFIC


The National Business Incubation Association (NBIA) identifies itself as the world's leading organization advancing business incubation and entrepreneurship. The association is composed primarily of incubator developers and managers, but technology commercialization specialists, educators and business assistance professionals are also well represented. Its mission is to provide training and a clearinghouse for information on incubator management and development issues and on tools for assisting start-up and fledgling firms.

The project team spoke with Linda Knopp, the NBIA’s Communications Manager, who indicated that the NBIA did not have a specific resource dedicated to forest or natural resource industry incubation. She suggested that the project team study three specific value-added wood business resource/incubation centres that have been successful in the United States. Two of these (the Watershed Training and Resource centre/Jefferson State Forest Products and Framing Our Community/Nez Perce National Forest Project) has already been identified by the project team, and are the subject of further analysis below.

North of the border, the Canadian Association of Business Incubation (CABI) is an active national association of organizations whose members are dedicated to creating employment and economic activity through the development of enterprises supported by the business incubation industry. Members of the Association operate small business incubators while associate members are interested in encouraging the incubation of enterprises.

The project team spoke with Michael Donahue, CABI’s Incubation Programs Manager, who provided some information about several support programs that could be implemented at the NFIC. He suggested that a successful business incubation or business resource facility will thoroughly examine the global market place to determine the correct industry sub-sector that local resources can be rallied together to tap. This will allow the facility to focus on two main goals: product development and technology development. Mr. Donahue indicated that having these two goals as the primary focus while including small business training and angel investment opportunities will provide many opportunities for entrepreneur if there is local support.

He noted that a natural resource business support facility should access Industry Canada’s many resources to help with market research, product development and technology development. As well, he suggested that the National Research Council Industrial Research Assistance Program (IRAP) can provide many services for small and medium sized companies. They focus of developing and commercializing innovative products in Canada through financial support, business and technical advisory services, and access to national and global business networks. Understanding that local First Nations populations are partners in the feasibility study for NFIC, Mr. Donahue suggested some businesses may wish to access the


small business financing start-up programs offered at Aboriginal Business Canada, a program developed by the Indian and Northern Affairs department of the federal government.

The project team also spoke with the managers or project directors of a number of active or emerging incubation facilities, including the Waterloo Technology Park Accelerator, nGen (the Niagara Interactive Media Generator), and even the Toronto Business Development Centre (where Michael Donahue of CABI has his “day job”). The specific insights from these discussions appear throughout the paper, and the nGen model – which offers some interesting lessons for the NFIC – is discussed in greater detail in section 5.4 below.

3.1.2Forestry Incubation Insights & Best PracticesA number of project team interviews explored the nature of existing forest sector incubation programs, with an eye to drawing out lessons and experiences that might prove helpful to the NFIC as it develops its own strategy and approach to value-added forest industry incubation. The project team explored the following issues with these existing incubators:

What lessons did you learn that could be valuable to Dryden? Is forest industry incubation possible? How did your initiative get started? Where did your seed capital come from? How did you mobilize the community, including the private sector, to support

your project? Were you or are you involved in any training programs to support your

efforts? If so, what was this and how was it delivered?

Detailed descriptions of the programs and operations within these incubators are found in section 5.4 below, but following are more general concepts and ideas gathered from these consultations.

Lynn Jungwirth is the Executive Director of the Watershed Resource and Training Centre, a California-based community economic development agency that helped to launch the Jefferson State Forest products incubation program. She discussed several topics about value-added forest industry development with the project team. As the executive director of a forestry training and business incubation center, she has a unique perspective on how to successfully build and develop a rural business incubation facility. She noted three key lessons from her experience that will help the NFIC thrive, including:

the risk of developing this type of facility must be shared between the partners

new technologies and technological assistance must be implemented to ensure access to global markets


the organization must not be mired in outstanding debt early in the development stage

She also suggested that sharing the risk between the partners of her incubation facility ensured that each partner has a vested interest in the success of the facility. The partners have developed strong working relationships to ensure that new technologies and technological advice are shared as an equal resource in the facility. Ms. Jungwirth gave the example of purchasing two new pieces of technology that are shared equally by several businesses in the facility. The clients are charged a market-rate to use this technology, which is then reinvested at the WRTC to develop new business training programs. She argued that to succeed, the NFIC would need to “Make world class technical assistance available – the newest technology and technology infrastructure – to ensure world class service and world class competitive pricing.”

When asked about developing specific forestry programming at the WRTC, she noted that they had implemented project-based training. The results from this experience are two-fold:

It provides forestry workers who come from an industrial timber model knowledge of environmentally sustainable forestry management techniques

It provides essential training for forestry workers to develop knowledge of service-based job bidding instead of industrial-based bidding

As the local mill decreased it shift from two daily shifts to one, many in the community were going to be left unemployed. The development of the WRTC was a reaction to the job losses. Initially many in the community did not support the center, as the mill was still providing many people with jobs. Ms. Jungwirth filled her board of directors with local community-minded citizens from the environmental community, the local First Nations community, local educators and business persons. She wanted a diverse group of representatives that would focus on keeping employment in the community. The goal for the WRTC was to move past the historical focus of primary and secondary forestry product development to the tertiary forestry development sector.

The organization’s efforts culminated in the development of Jefferson State Forest Products, a very successful furniture, retail and store fixture manufacturer. Jefferson State has been so successful that they have attracted external investment that has allowed them to expand and integrate a primary processing facility, secondary processing and the tertiary industry. The company now has a small capital and small volume sawmill that has allowed them to expand their product offerings to ensure diversification. In turn, this investment has attracted several new companies to the community that wish to access the services provided by the WRTC.


The project team also talked at length with Rob Woodward, the CEO of the Saskatchewan Forest Centre, who provided a uniquely Canadian perspective on the development of a forestry-based business resource centre. The practical lessons he suggested would be useful for the development of a facility such as the NFIC included how to finance the facility and how to structure the organization. Mr. Woodward noted that the process of building a facility of this nature will involve several partners. To ensure success, each of the partners must buy into the organization’s vision and common objectives.

He suggested that if given the opportunity again to develop the Saskatchewan Forest Centre, he would have the same partners as on the first attempt (Saskatchewan Industry and Resources, Saskatchewan Environment, Saskatchewan Agriculture, Food and Rural Revitalization, Western Economic Diversification Canada and Natural Resources Canada) but that he would prefer to work with these partners to hammer out a single funding and reporting agreement. Currently, administrating the funding agreements from five different partners is very time consuming and expensive to administer.

His second practical lesson is to keep the organization as a separate entity from educational institutions and government (this is consistent with the findings of the literature review above in section 5.2). He argues that government and educational institutions do not have a primary focus on developing profitable products and therefore should be kept at arm’s length from the organization itself. He noted that the incubator “should be set up where industry has a leading role in what the forest centre can deliver.” Mr. Woodward noted that local industry has been very supportive of the Saskatchewan Forest Centre because the opinion of industry is solicited and implemented on an ongoing basis, ensuring that competitive products are delivered into the global marketplace.

The project team interview also explored how the Saskatchewan Forest Centre has developed incubation programming and entrepreneurship training. Mr. Woodward’s first point was that it takes time to develop programming and training that is genuinely useful. His organization took five years to completely develop their current training programs. He stated that “those employed in silviculture [such as] an ecologist and a biologist are easy-to-find people, as they are people who want to live and work in Prince Albert, a rural remote forested area. It has been much harder to find employees that have expertise in finding market information and product definition [since] these people want to live in urban centres.”

As the Centre has developed its forestry programs, Mr. Woodward noted the strong linkages to private companies as the reason for developing niche programming. The Centre knew that commodity production should not be the focus for the product development. Mr. Woodward and his staff built training programs that looked for ways to decrease costs as a means of assisting private companies to be successful in the forestry sector. He knew that the private companies do not gain any


revenues from forestry planning and reforestation, so the NFIC should look for ways to decrease costs for the private companies, which would thereby increase their ability to pursue environmental and business sustainability. In Saskatchewan’s case, these programs have spurred the development of local entrepreneurs and small companies that are working to promote environmental sustainability while decreasing business costs for large and medium forestry producers.

Mr. Woodward noted that the Prince Albert community has always had a strong economic linkage to the forest, so the development of the Saskatchewan Forest Centre received a large amount of public support from the beginning. The community rallied around the development of the facility and provided many of the resources and funds to build the facility. Mr. Woodward noted that the NFIC may wish to work with FPInnovations, a private sector value-added forestry development company, to learn more about Dryden’s forestry capabilities.

As the Executive Director of a rural forestry incubation centre, Joyce Dearstyne supplied the project team with insightful information about natural resource incubation. As the local mill in Elk City, Iowa began to decrease the number of shifts, the community came together to form Framing Our Community Inc. This organization has now successfully developed a full-circle sustainable development process for the forestry community. She noted that “Framing Our Community's integrated approach to community-based forestry creates a process that begins in the woods with forest and watershed restoration, low impact methods of extraction, and fuels reduction for fire safety, to the manufacturing of value-added wood products, to the development of urban markets and the use of remaining biomass for the generation of electric power.” This highly integrated process has provided jobs for the Elk City community while decreasing dependence on outside resources and decreasing the depletion of the natural capital in the forest.

When the project team asked Joyce to identify any lessons that she could pass along to the NFIC, she identified long-term planning as a key. She indicated that the community must be proactive in the process of natural resource business incubation. If Framing Our Community waited to organize until after the mill had completely closed, then they would not have been a success as many of the local labourers would have left the community to pursue other job opportunities. Establishing the business before the mill closure was complete also allowed the company to plan strategically to determine which value-added forestry products the community should develop. This proactive response ensured that when the mill did close, there were training and entrepreneurial opportunities available to the laid-off workforce. If the community had been reactive (rather than proactive) the same opportunities would not have been available and the greater community would have suffered. She also noted that this long-term planning had ensured success for the current business incubator as it is currently completely full. As a result, Framing Our Community is in the process of building a second facility.


3.1.3Finland and Finnish Trade InsightsOne of the potential projects of the NFIC process is the potential role of Finnish forest industry consortium, Wood Tech, in supporting the new incubation program. To better understand some of the spin-off and related opportunities this link presents to the NFIC, the project team engaged with a number of agencies, institutions and companies directly engaged in trade relationships between Finland and Canada. During these exchanges, the project team paid particular attention to issues as they relate to forest sector opportunities.

Experts were asked their opinions on Canada’s forest industry in relation to markets in Finland and other international markets. In brief, it was felt that Canada is considered a desirable location in which to do business, but more European companies and countries are also now becoming more competitive and involved in the forestry sector. A complete description of the questions and responses can be located in Appendix C at the end of this report.

3.2 Comparator ProjectsA number of comparator projects were identified as a result of the external expert interviews. The following section provides an overview of two of the incubator models that may offer valuable lessons or parallels to the NFIC situation.

3.2.1Saskatchewan Forestry Centre, Prince Albert, SaskatchewanEstablished in 2001, the Saskatchewan Forestry Centre is a non-profit corporation that has three main objectives:

Create a focal point for technology transfer capacity in the forest sector Fill applied technology gaps Develop niche areas of expertise

To meet these objectives, the Centre partnered with Natural Resources Canada and FP Innovations (a private/public partnership of FERIC, Forintek, Paprican and the Canadian Wood Fibre Centre). The technology transfer objective is being accomplished through offerings of workshops/seminars, providing publicly accessible information on the organization’s website and field visits by experts from the Centre to client companies and communities. Forintek has been contracted to provide three staff to deliver seminars in the value-added sector.

To complete the objective of mitigating applied technology gaps, the Centre employs a “Forest Development Fund” to research where gaps exist and which technology to employ to reduce or eliminate these gaps. The final objective of developing niche areas of expertise has been implemented through a system of staff research to identify any niche areas that can contribute to the Centre’s core processes. To date, niche areas that have been identified are the development of a virtual data warehouse and a forest management plan for Crown Lands, financed by trust funds generated from forest operations.


Best Practices and Lessons for NFIC

Partners such as FP Innovations, Natural Resources Canada and FERIC have provided staff and operational resources to the Centre, allowing the Centre to deliver on its core mandate. The Centre has also gone on to obtain funding from several organizations, including Natural Resources Canada, Western Economic Diversification Canada, Agri-Food Canada, Canadian Forest Service and the

nGen: the Niagara Interactive Media Generator, St. Catharines, Ontario

3.2.2nGen: the Niagara Interactive Media Generator, St. Catharines, Ontario

While not a forest-related incubation project, nGen highlights the fact that current incubation practice support both business ventures and non-commercial ventures that may serve to strengthen a community’s capacity in a particular sector, while at the same time creating additional opportunities for new economic development and cluster development initiatives.

The nGen project was launched to help position the City of St. Catharines (and the Niagara Region more generally) as a new centre and focal point for the interactive media industry in Ontario. In particular, the initiative seeks to explore methods for assisting the growth and development of local businesses and ventures attached to the digital media sector, while at the same time examining the potential to create a larger regional interactive media cluster. As a result, the project is interested in establishing a set of specific, street-level programs to support the sector’s growth, but also in creating a supportive regional environment that will make Niagara a centre of excellence and activity.

In pursuing this objective, however, the nGen steering committee emphasized the fact that although new venture creation (and resulting job creation) was a high priority, attention should also be paid to project-based opportunities, whether or not they had explicit commercial ties. These projects would ensure a minimum threshold of activity within the incubation operation, provide avenues for engaging experts, and produce products and opportunities that might lend themselves to future commercial opportunities. In essence, project-based initiatives grow the scope and extent of the cluster as a whole.

In establishing its initial workplan, nGen adopted three projects (in addition to their business-focused service and incubation offerings). These were:


Best Practices and Lessons for NFIC

Partners such as FP Innovations, Natural Resources Canada and FERIC have provided staff and operational resources to the Centre, allowing the Centre to deliver on its core mandate. The Centre has also gone on to obtain funding from several organizations, including Natural Resources Canada, Western Economic Diversification Canada, Agri-Food Canada, Canadian Forest Service and the

The development of an interactive media-based marketing video and CD highlighting St. Catharines as an emerging centre of the interactive media industry

The creation of a social networking website for the promotion of the local music industry

The development of an educational video game based on the spread of a smallpox epidemic in 19th Century Montréal, as a means of teaching both history and virology

The first of these projects has now been completed, and the other two are underway.

4 Community Perspectives on the NFIC Project4.1 Community Consultations SummaryA Community Consultation process took place in early 2008 to garner thoughts and opinions on the forest sector and on incubation opportunities related to the NFIC concept and its potential support for value-added forest industry activities. Three basic questions were posed during these consultations:


Best Practices and Lessons for the NFIC

While traditional incubation relies primarily on services and support to business, the “generator” model of incubations suggests a wider potential range of activity. This wider range allows the development of more partnerships (including funding partnerships) and allows the incubator to undertake more work of value, while increasing the depth and strength of the cluster effect so desired in sector-specific incubation programs. While the primary focus of the NFIC should be on business-related opportunities, project work will be an attractive additional component of the facility’s activities.

4. What should the regional forest industry look like in ten years? The Project Team wished to illuminate how the participants viewed the regional forest industry in the future. Responses enable the team to understand future trends and issues, and to build a sense of how Dryden can be a successful player in the forest industry for years to come. The discussion focussed on marketing, employment factors, corporate and market structure, supply of fibre and raw materials, value-adding, new product development, best practices, government participation and the environment.

5. What do we need to do (action steps) to get there? This stage of the consultations involved outlining the specific actions required to get from where the community is today, to where it needs to be in the future in order to take full advantage of the opportunities identified in Question One (above). The discussion focussed on data tools, access to capital and financing, employee skills, communications, institutional roles, new technologies, infrastructure and the importance of the entrepreneur in the forestry industry.

6. Which actions could be led by the NFIC? The final question that the community consultation addressed was defining a role for the NFIC as the action plans are developed and implemented. Several opportunities emerged from these discussions.

A venue for small business to access senior levels of government and industry

An opportunity for the sector to speak together A place to negotiate government partnerships for incentives to

entrepreneurs A place to build partnerships within the community A place to bring entrepreneurs and ideas together

Another role discussed was the concept that the NFIC could be an enabler of knowledge for the value-added forest industry sector. Comments included:

Collect the knowledge of the world and use it locally A venue for introducing new technologies and new practices to the

local market A centre for sharing attributes, innovations and products A place to introduce change A place to access knowledge and advice for new opportunities A centre to promote better resource utilization A place to be visionary, and then move to action

A complete report of all questions and related comments can be found in Appendix A at the end of this report.


4.2 Online SurveyAn online survey of local public sector and not-for-profit sector organizations seeking to support local business development was launched by our project team, and asked six questions designed to help the team increase knowledge of the local forestry sector, and to gain additional insights into the necessary steps that could be employed to create successful business ventures through the NFIC. Questions centred on the future of the forestry sector, value added opportunities and the role of the NFIC in forestry initiatives.

The first question asked the respondents to look forward and describe how the forestry sector will look in ten years. These results provide the project team with important information to define the scope of what the future of the industry will be and to create an action plan for Dryden to be successful in that future. The specific comments from the respondents on question #2 were as follows:

The industry will shrink - fewer jobs, more automation, less demand for paper products

A smaller, sustainable, profitable primary industry (pulp, paper, lumber) 5-8 percent of the primary lumber and underutilized species being converted

to value-added products Research has been completed and some bio-fuel products being

manufactured or processed Research well underway in the Bio-medicine area and maybe a few of these

products will be commercialized This should be a prosperous business with many partners working and

sharing info/services/education/training funding sources toward a booming forest industry and developing job creation

More efficient, more focused and producing new value added products

The second question that the project team asked was “Recent estimates suggest that there are about 10,000 forest industry jobs in north-western Ontario, but less than 200 in value-added forest products. What kind of value-adding operations would you like to see in the region in ten years?” The goal in asking this question was to determine specific value-added products that may be added to the forest production chain. Adding value to the products increases job and revenue opportunities for the producers. The specific comments from the respondents on this question were as follows:

Existing truss manufacturers regularly manufacturing panelized walls Expansion of the log home industry Outdoor & patio furniture Furniture manufacturing Pre-engineered homes IKEA Type furniture


In question three, the project team asked the respondents to examine their responses to questions #1 and #2 and identify concrete actions that should be employed to achieve future success. The respondents’ defined actions included:

Public education and marketing of the potential regarding value added wood Conferences like FI:RE2007 but geared to value-added wood products Some activities to draw the entrepreneurs out Have the MNR announce a 15-25 million dollar (Grand/Loan) fund available to

new or expanding value-added wood manufacturers There need to be better relationships with our government, in order to help

overcome the political blocks that stop most of our projects. We need to have them on board to help change some of the laws and policies to open up the market.

Start partnerships with the companies who have the wood rights to share the “whole tree” idea, so that we are utilizing the whole tree

More technologically trained employees

Question #4 asked the respondents to identify what role the NFIC in the concrete actions steps outlined in question #3. The roles identified for the NFIC included the following:

Lead initiatives to make the public more aware of the potential in value-added wood

Create events that bring small manufacturers, MNR and politicians together to exchange points of view

Determine what companies have wood rights and where they are located. Contact our local MP and have them sit down and determine if we could come up with a plan to share the “whole tree” plan. Then put into practice the plan. This should free up the product. Sharing the whole tree idea, we now look for interested partners.

Plan, develop, and find new markets

The final question was more open-ended and asked respondents, “Are there any other thoughts about the value-added forest industry that you would like to share?” The responses from the respondents were as follows:

80% of the forests in the north are conifer and are seen as traditional commodity species. Research should be undertaken to determine species suitability to value added products

The centre that will be developed should be an office or offices that can link all forest-related industry with training accessibility/help lines /partners/funding sources to promote all of the above

Incentives for manufacturers and support for innovative product development


4.3 Community Stakeholder InterviewsThe project workplan called for the project team to conduct 6 to 8 interviews with local stakeholders as a part of the community consultation process. Ultimately, 9 local stakeholders have been interviewed. Those interviewed to date include:

Kathryn Duchnicky, FedNor James Kroeker, Two Feathers Brian Miles, PACE Liz Norman, NTAB Rick Prior, Innovation Centre Judy Sander, Innovation Centre Bonny Skene, Domtar Mike Wood, City of Dryden councillor and forest industry worker Wayne Zimmer, Seven Generations

These stakeholders’ opinions were solicited to determine possible funding models\support for the NFIC, to learn if the project should include more or different partners and to further define what training and resources should be offered by the NFIC, among other issues. A summary of their responses is as follows.

Do you think the NFIC will be valuable?

Short-term value to help train members of the first nations communities to work as independent entrepreneurs

Long-term the NFIC has the possibility of creating new employment for the region

It can be a valuable organization if all the partners involved in the process accept the common goals and make an effort to participate in the process

The NFIC can become a very valuable resource for Dryden because much of the forestry research takes place in locations near the corporation head office. The NFIC will allow the community to engage in the forestry research process

It may be, but where will the NFIC get its timber from? The NFIC will be a valuable resource only if the project is sustainable well into

the future. The project should have the resources and support to be a long-lasting resource for the community

If it is a success, the NFIC will create value by diversifying the economy and through diversifying the local labour force into new job opportunities

Would you use the NFIC facilities on a regular basis?

There are possibilities to create a branch office or move our facilities to the location

Yes, and there are specific areas within the facility that have been identified as well-suited for their business purposes


I see an important mentorship and collaboration role between us and the NFIC

The facilities at Confederation College are currently meeting our needs If the NFIC focuses on applied research to create products for market, then

we want to access/partner with the facility Maybe, depending on the type of services and program offered Yes, our organization has several target training areas that the NFIC could

support Depending on the rent costs we may be a tenant in the facility

Would your organization be prepared to contribute to the NFIC...

a) Financially?

Yes, incremental project based funding and the possibility of providing equipment

Yes, we would like an ownership stake in the project We would like to invest either as a partner or to provide a loan to the

organization Our organization could create a start-up loan for the NFIC

b) In terms of Staff time?

Providing staff as a support to offer training and programming is possible We can provide the NFIC with staff support for branding and marketing We may wish to use the facility There is a possibility of loaning staff as in-kind support

Have all the right partners been invited to the NFIC table?

The general consensus was that all the correct partners have been invited and are participating in the process. The unique responses are as follows:

Yes they are, assuming that the Wabigoon Lake and Eagle Lake First Nations groups have agreed to partner in the organization

No, there should be more involvement from private business. Independent contractors and the Chamber of Commerce should be involved in this process

No, Domtar should not be part of the process. They will detract from branding opportunities for NFIC

Would you be willing to sit on the NFIC Board?

Most of the stakeholders interviewed suggested that they can be members of the board of directors

Where should the NFIC be located?


At the Weyerhaeuser Centre The Weyerhaeuser Centre is an ideal location, but the costs to purchase the

facility may be a barrier. Other less expensive locations may need to be considered

Classroom training could occur at the Weyerhaeuser Centre

Should it be physical or virtual in orientation?

The majority of respondents indicated that the facility should be physical in orientation, with the possibility of offering some training virtually

If you could add any operations, programs or facilities to the NFIC, what would they be and who would deliver them?

A pool of shared resources such as administrative assistance, project co-ordination and support and business support that would be a shared cost for each of the tenants

Adopt the Finnish approach of intensively utilizing resources The NFIC should be run as a not-for-profit organization that bridges the gap

for entrepreneurs. The citizens need financial, business and technology support and training to succeed

Another opportunity is developing non-timber forest products such as biomass, biofuels, and essential oils

Ensure that the NFIC is viewed as a partner for business and education. The facility should be seen as open to anyone in the community to use

Increase opportunities to sell into foreign markets by creating niche products. The NFIC should support knowledge transfer about forest sustainability and

new business incubation The NFIC should support the use of new technology. The Centre should focus

on developing training in the IT sector so the administration and marketers of the program and business entrepreneurs have the necessary skills to be successful

Cultural and language training may be useful to bridge any cultural barriers that may exist between the partners involved in the NFIC

4.4 Preliminary ConclusionsIn assessing the feasibility of the NFIC concept, a number of conclusions arose from the preliminary research and consultations. These include:

Broad support for the NFIC concept exists within the community While value-added forest opportunities remain a priority for the community,

interest extends to a wider incubation/generation offering to help support new local entrepreneurial venture


A suitable facility has already been identified in the former Weyerhaeuser training facility

Potential tenants have been identified, including Two Feathers, Seven Generations and others

Community support for the project has been mobilized through a series of steering committees and public consultations

Some institutional partners, including the City of Dryden, local First Nations and others, have expressed support for the initiative

However, a series of additional feasibility questions remain. These include:

What exactly is the NFIC: an incubator, generator, accelerator, enterprise centre, etc.? All of these suggestions – and more – arose during research and community consultation.

Does the proposed facility have a clear function and focus for its activities? Can it overcome the likely obstacles in its path in order to fill this function? In

particular, can a forest-focused centre overcome challenges such as lack of access to fibre, and slumping international markets

What kind of staff will be required to operate such a facility, and can it be found in the local labour market?

Given the issues addressed, what are the operating costs of such a facility likely to be, and can this budget be accommodated within potential revenue streams?

How will the facility be legally structured and governed once it is established?

The project team turned its attention to these issues in a more formal research process, described in the following chapter.


5 Incubation and the NFIC: Theory, Best Practices and Models

5.1 Language and Role: What is Incubation?One of the primary challenges in assessing the potential feasibility of the Northern Forest Innovation Centre is answering the question “What is it?” While community consultations speak to aspirational issues and strategic action plans addressing operational concerns, there is a basic question of function and form that must be addressed, and language adopted that reflects a specific sense of purpose and goal.

Broadly speaking, the NFIC is envisioned by most as an “incubation” facility. It is intended, first and foremost, as a centre to spur business-based expansion and private opportunity, leading to job creation, economic development and entrepreneurial viability. Through physical facilities, program delivery or virtual support systems (or often a combination of these of these approaches), they seek to nurture and promote the viability and success of companies participating in the incubation program.

Academics developed the “incubator” label in order to distinguish certain active business support structures from a range of other structural types, including Business Parks and Research or Technology Parks. Business Parks are typically differentiated from incubators or incubation programs by the fact that they are generally passive; they focus on land and real estate, but not on the economic development, project initiation or business support services that characterize incubation efforts. Research and Technology Parks often do offer more active incubation-style support services, but in contrast to incubation programs they tend to emphasize the presence of and access to primary research or testing facilities, including laboratories. In part, this also tends to result in a heavier influence of research and development and commercialization programs within the programming of these facilities.

From this perspective, the term “incubator” is used in the academic literature (and much of the economic development literature) to refer to any proactive, service-oriented facility (physical or virtual) designed to enhance the performance of specific individual businesses through a series of infrastructure supports, advisory services, and/or shared resources. Underneath this description, though, it is clear that the term incubation covers a very wide range of activities and structures.


While incubation programs have continued to operate successfully around the world, many have chosen to rename themselves in order to avoid negative public perceptions. Additionally, some incubator tenants have argued that the term “incubation” now connotes participation in early stage, subsidized and unskilled activities, and therefore poses an image problem when seeking financing or approaching clients.

In light of these negative perceptions of incubators, many existing operations began to change their names. They were no longer “incubators” – they became accelerators”, “venture centres”, “business development centres” or “generators.” While their program offerings remained largely unchanged, savvy marketers recognized the need to embrace new labels and new descriptors. Economic developers also began using this new language. Within the academic realm, however, a more conservative approach was retained. “Incubator” remained the term used to describe the field and its institutions and facilities. This language is reflected, for example, in the literature review that follows in section 5.2.

Nevertheless, confusion continues to exist around the different terms within the incubation arena. In 2007, as part of its ongoing work in this field, Millier Dickinson Blais developed the following definitions:

4. Incubation: a series of proactive support programs delivered from either a physical or virtual space designed to enhance the viability of new and emerging businesses within a specific community or sector of economic activity.

5. Acceleration: a series of proactive support programs delivered from either a physical or virtual space designed to fast-track the growth and development of existing small firms with significant market potential, often in a specific economic sector.

6. Generation: a series of proactive support programs delivered from either a physical or virtual space designed to kick-start both businesses and joint public-private projects as part of a larger effort to grow a specific economic sector or anchor the development of an economic cluster.

From this perspective, the project team believes that the ideal positioning (and language) for the NFIC is as a “generator”. This emphasizes the facility’s role in project and sector development over its responsibilities for supporting individual business start-ups, while retaining the functional aspects of more generalized incubation systems and structures.

5.2 Literature Review: Learning from Five Decades of ResearchAs discussed in Section 5.1 above, in the academic context incubators, accelerators and generators are all grouped under the general label of ‘incubators’. While practitioners are divided in this regard, the literature itself groups these efforts


together in an effort to ascertain broad trends and develop policy recommendations as a result.

The first modern business incubation facility was the Batavia Industrial Centre, established by the Mancuso Business Development Group in Batavia, New York in 1959. Established in an abandoned 850,000 square-foot Massey Ferguson plant, the facility has successfully incubated more than 1,100 businesses over the course of the past half century, generating tens of thousands of new jobs in the process.

Since 1959, the number of incubators active across North America has grown substantially: recent estimates suggest that some 1600 incubators are currently operating in North America, while a further 900 are found within the European Union. While the rationale for launching incubators and incubation programs varies from facility to facility and jurisdiction to jurisdiction, a recent study has attempted to provide an overview of the desired outcomes leading to business incubation program development. Kathleen Boyd’s Developing a Business Incubation Program (2006) suggests that possible outcomes include:

Job creation Technology commercialization New business formation Wealth creation Tax revenue generation Neighbourhood revitalization Economic diversification Community development Industry cluster/sector development Empowering women, minorities, and low-income individuals Encouraging an entrepreneurial culture in communities that have traditionally

relied on large corporations for employment

Although no one incubation program is likely to address every issue on Boyd’s list, most will address more than one. As a result, at a practical level it is difficult to succinctly summarize the role and function of business incubation programs; incubators are, instead, deliberately varied in form and function according to their goals and objectives.

Having said this, some researchers have been able to make some generalized comments about the nature of successful and unsuccessful incubation initiatives. In a 1995 report prepared for the Centre for Entrepreneurial Leadership entitled Growing New Ventures, Creating New Jobs, Mark Rice and Jana Matthews suggested that there are three central principles of successful business incubation:

1. Focus the energy and resources of the incubator on developing companies


2. Manage the incubator as a business, i.e. minimize the resources spent on “overhead,” and develop a self-sustainable, efficient business operation

3. Develop a sophisticated array of services and programs that can be targeted to companies, depending on their needs and stage of development.

Additionally, the literature is in general agreement that some approaches increase the likelihood that an incubation program will ultimately be successful. First, there is a consensus that a strong feasibility study is a necessary precondition for the development of any incubation program. In an article entitled Feasibility Studies: Answering Tough Questions, Carol James suggests that feasibility studies improve the chances of incubation success by addressing issues in four central areas:

1. Market, including the composition of the community’s or region’s entrepreneurial pool, the needs of prospective clients, and whether the community can meet those needs

2. Stakeholder buy-in, which focuses on garnering program champions and community support

3. Financial feasibility of the project, both short term and long term4. Availability of real estate suitable for a business incubation program

As suggested by this last element, there is also a general consensus in the literature that incubation programs focused in and around an actual “bricks and mortar” facility are more successful. In particular, bricks and mortar facilities are seen as having advantages in terms of focusing energies and efforts, allowing rental revenue streams to improve financial sustainability, creating synergies among disparate parties and companies, and providing a natural delivery point for services and programs. While there are a handful of examples of successful virtual incubation programs, the track record of bricks and mortar facilities is far superior.

The literature also agrees that some incubation approaches are more likely to fail than others. David Lewis’ 2002 study Does Technology Incubation Work? suggests that the following factors often lead to incubation failure:

Inflated expectations Selection of inappropriate staff Overestimating the incubator’s role in local economic development Overspending on incubation Failure to adequately leverage resources

Boyd’s Developing a Business Incubation Program articulates three further areas of concern. First, she emphasizes that a failure to adequately plan an incubation initiative can be disastrous. Second, she argues that some programs fail because they focus on the availability of a particular piece of real estate rather than strong understanding of a market niche or opportunity that is ripe for development. Third,

Northern Forest Innovation Centre Final Report 34 | P a g eLessons for the NFIC

Incubation is thriving in North America, but the positioning of facilities and services must be such that they build on best practices and proven methodologies. Dryden is addressing many of the basic concerns through its two linked feasibility studies and a series of community consultations designed to

a lack of solid and ongoing cooperation among stakeholders often leads to problems.

Technology Incubator Trends

In recent years, the incubation of technology enterprises has risen to increasing prominence within the incubation sector. Lewis reports that by 2002, some 25% of all US-based incubation programs had a technology focus.

Incubator TypesTechnologyMixed UseManufacturingTargetedServiceEmpowermentOther

Source: Does Technology Incubation Work?

In part, Lewis suggests, technology incubation “increases the rate of industrial innovation by intervening in the innovation process and tightening the links between market and innovating firm as well as between innovating firm and basic and applied research.” At the same time, technology incubation appears to “accelerate technology transfer and commercialization by linking talented entrepreneurs with ideas for industrial innovations to individuals with the market wisdom to commercialize their innovations, as well as with economic resources.”


Lessons for the NFIC

Incubation is thriving in North America, but the positioning of facilities and services must be such that they build on best practices and proven methodologies. Dryden is addressing many of the basic concerns through its two linked feasibility studies and a series of community consultations designed to

This understanding is echoed by the work of the US-based Southern Technology Council, whose 1996 publication The Art & Craft of Technology Business Incubation suggested that:

Technology business incubation involves the commercialization of science and technology through newer community-institutional arrangements which can be thought of as technology venturing. It concentrates on alliances as an economic development strategy. Technology venturing is based on creative and innovative ways of linking public sector initiatives and private sector resources within and across regional and national boundaries for promoting economic growth.

Technology incubation can foster corporate and community collaborative efforts, while nurturing positive government-academic-business relationships. These new types of organizational alliances incorporate a dynamic private sector; a creative role for government through technology policies, initiatives and development programs; and innovative academic relationships. The science and technology policies that promote and flow from these technology alliances are redefining the role and scope of the wide variety of institutions involved in advancing economic growth through technology.

The report further suggests that while there has been a “rapid and spontaneous burgeoning of technology-based start-up companies in general,” the entrepreneurs leading these companies “have negligible experience in managing and growing a small enterprise.” As a result, these entrepreneurs tend to be “assistance-intensive” and likely to benefit from focused and specialized incubation programs, particularly where those programs are not focused solely on the presence of real estate or physical facilities, but also on “access to skills and tools needed to create a successful business.”

While examples of successful technology incubation programs abound – including Technopolis in Helsinki, Finland, the Research Triangle Park in Raleigh-Durham, North Carolina, Route 128 in Cambridge, Massachusetts, and IC² in Austin, Texas – Lewis suggests that communities with certain characteristics are best suited to technology incubation. These are communities whose attributes include:

The presence of one or more technology generator (such as universities, colleges or public and private laboratory facilities)

A skilled work force A “technology culture” in the community that does not regard past

entrepreneurial failures as a stigma or barrier Sufficient investment capital activity, including angel investors and venture

capital

However, while the evidence of success is widely recognized, the literature also suggests that technology incubation needs to be approached with caution. Many researchers have commented on the fact that the history of technology incubation is quite short, and the sample size relatively small, making it hard to assess the long term benefits of such initiatives. Furthermore, research has tended to focus on successful models, rather than unsuccessful models. Nevertheless, the literature


accepts – in general terms – that incubation can be a powerful tool in seeking to drive economic development in technology-intensive sectors and clusters.

The literature further suggests that although technology incubators are larger in size than other incubators (about 39,000 square feet vs. about 24,000 square feet) and some 25% more expensive (with an average annual operating budget of US$320,701), they graduate fewer successful companies. Where technology incubators graduate approximately 1.7 companies per year, the average of all incubators is 3.3 graduates per year. However, technology companies tend to be about 35% larger at graduation (with 30.4 employees) than the industry average (22.4 employees). This underscores the notion that technology companies tend to be more assistance-intensive than other companies, as they are generally not ready for graduation until much later in their growth cycle. These statistics also suggest that technology incubation has significant advantages, however, as the longer incubation period appears to strongly benefit technology companies by spurring more growth than among other types of firms.

Jobs Per Graduating Company

Graduates per Year

0 5 10 15 20 25 30 35

Technology IncubatorsAll Incubators


Universities and Colleges in Incubation



While technology incubation has more significant economic development impacts than traditional incubation, it relies on a local enabling environment (large numbers of highly skilled knowledge workers, leading edge IT infrastructure, etc.) that may not be fully developed in Dryden. On average, technology incubators are also much larger than the proposed facility in Dryden, which is 15,146 sq. ft. From this perspective, technology should not be a primary focus for the NFIC. However, the emphasis of business support and development within the NFIC’s operations may help to enhance the impact of the centre’s work by emulating the approaches, drivers and results of technology-focused incubation. In other words, within the NFIC structure, technology-driven entrepreneurial opportunities will likely produce greater results than efforts not supported by or based on new or emerging technologies.

There is a broad consensus in the incubation literature that universities and colleges are ideal partners in the development of incubation programs and facilities. In Nanette Kalis’ 2001 study Technology Commercialization though New Company Formation, she argues that university-linked incubation programs offer two-way advantages: universities gain through opportunities to engage in technology transfer and commercialization efforts linked to their research results, while companies gain increased access to university facilities including libraries, laboratories and technology tools.

This perspective is echoed in a paper by Linda Knopp entitled Incubator-University Partnerships (2004). Knopp suggests that “Many universities are turning to the business incubation concept as a teaching tool for students and faculty and a commercialization vehicle for university-developed technologies. Much like other incubators, academic-affiliated programs have a variety of goals, including promoting economic development, commercializing new technologies, and enhancing universities’ research missions.”

Knopp goes on to articulate a series of benefits specific to university- and college-backed incubations programs:

Academic-affiliated incubators provide entrepreneurs: Well-equipped laboratories, extensive libraries, and powerful computer

systems Technology expertise A well-educated workforce Subject matter experts among the faculty Academic-affiliated incubators provide students: Internship or part-time job opportunities Real-world examples for case studies or class projects Opportunities to apply their knowledge to real business problems An introduction to entrepreneurship early in their professional careers Academic-affiliated incubators provide colleges and universities: Opportunities to strengthen ties between the educational institution and the

local business community A system for bringing technological advances and products to market A recruiting tool for faculty and students interested in entrepreneurial

opportunities An opportunity to fulfill research, academic and community service missions

This win-win environment has prompted large numbers of colleges and universities to enter the incubation arena in recent years. Lewis has suggested that fully 24% of all U.S.-based incubators now boast some link to a university or college.


U.S. Incubators by Sponsoring En-tities

Universities CollegesGovernment Economic Development

OrganizationOther (including private sec-tor)

No Sponsoring Entity


Interestingly, Canadian universities and colleges have been slower to enter the incubation arena. A 2005 Statistics Canada study incubators found that only 10% of Canadian incubators were sponsored by colleges or universities.

Canadian Incubators by Sponsor-ing Entities

Universities and CollegesGovernmentNon-Profit GroupOher (including private sector)

Source: Characteristics of Business Incubation in Canada, 2005

Drawing on more established patterns and trends in the U.S., however, the literature suggests that a technology focus is the best option for university or college sponsored incubation facilities. “Technology commercialization” suggests Kalis “is an ideal role for incubators within universities.” However, such structures are not without their challenges. Many researchers single out the nature of university and college cultures as a potential barrier to the successful operation of an incubation program. Several incubation researchers have pointed to a report of the Council on Government Relations entitled A Review of University Industry Research Relationships, which identifies a “culture gap” that stymies academic efforts to support technology commercialization. In a 1995 report called Benchmarking Best Practices for University-Industry Technology Transfer: Working


with Start-up Companies, the Southern Technology Council argued that “universities do not include faculty entrepreneurialism as a formal factor in promotion or tenure decisions” and, as a result, create a system in which partners in a university-affiliated incubation program often measuring success and progress by dramatically differing measures.

However, the literature is unanimous in suggesting that – if the culture gap is bridged – universities and colleges can dramatically improve the performance and opportunities for success of an incubation program. Indeed, from an economic development perspective, the involvement to of universities and colleges significantly improves the chances that an incubation facility will ultimately be able to play a key role in the development of a larger industry cluster within a given community or region. A 2004 study by the Economic Development Administration of the US Department of Commerce, entitled Universities and the Development of Industry Clusters, found that “universities are increasingly recognized as key partners in state and local development efforts, and in some instances are actively engaged in initiatives to promote cluster-based development.”

Incubator Activities: Process, Practice & Service

The potential range of activity within in an incubation program is enormous, and a wealth of highly detailed and often contradictory research exists to highlight best practices and practical models. Lewis has argued that the key attributes of a successful technology incubation program include:

Below-market rent for physical space with basic equipment Access to sophisticated equipment at no or reduced cost Free or subsidized business services, saving the start-up firm operating

capital Improved access to capital markets

Although there is general agreement on most of this list, the first point is contentious. Many Canadian incubators – such as the Waterloo Technology Accelerator and the Toronto Business Development Centre – charge in excess of current market rates, and argue that such a step is necessary for the long-term



While partnering with a university or college in the development of the NFIC offers certain operational advantages, it also comes with a number of additional challenges and obstacles. The NFIC should ideally work closely with Confederation College and other regional post-secondary institutions, but not affiliate or connect to them in a formal manner.

viability of the incubation program. Similarly, Robert Meeder’s seminal 1993 study Forging the Incubator: How to Design and Implement a Feasibility Study for Business Incubation Programs states explicitly that “A facility with below market rent is not recommended.” He also suggests that “in the early 1980s many business incubation programs emphasized ‘cheap rent’ and ‘flexible space’ as their niche in the real estate business. In our opinion this was the wrong message to communicate.”

In Finland, seen by many observers as a global leader in incubation practice, companies begin by paying market rates, and then see that rent increases over time as a way of encouraging graduation. In his 2004 paper Government-Sponsored Incubators in the Helsinki Region, Finland: Infrastructure, Results, and Best Practices, Pier Abetti describes the practices of 16 Helsinki incubators, including Innopolis, the Otaniemi Science Park:

“The rent is the normal level for the Helsinki Region. While there is no time limit for companies that are in the incubator, the rent is raised by 10% after two years, and 10% every year thereafter.... most companies will move out in the third or fourth year...”

Overall, the literature seems to agree with Meeder that “cheap rents” are a mistake sending the wrong impression to the local real estate and business communities, and artificially insulating incubating businesses from the realities of real-world operating costs. The consensus is that rental rates at or even above current market rates are both conducive to long-term business success and the ongoing financial viability of the incubation operation itself, which often sees rental income as a significant source of operating revenues.

The literature suggests, however, that a broad range of activities are, in fact, helpful within the incubation context. These include:

Help with business basics, such as business planning assistance, assistance understanding regulatory requirements, economic development advice, etc

Access to specialized service providers, including lawyers, accountants, patent officers, e-commerce and web design professionals, international trade experts, etc.

Networking opportunities among clients Specialized seminars and training programs Access to shared infrastructure and shared administrative support services Access to financing programs, both formal and informal, including traditional

lenders, angel investors, venture capital, micro financing, etc. Access to computer labs and other shared technology resources Access to resource libraries and specialized databases of information Assistance with technology commercialization Mentoring and advisory programs


Security systems Access to marketing and promotional opportunities University and college linkages, and access to research and development

results Pre- and post-incubation services

While the focus of these programs is on those tenants within the bricks and mortar incubation facility itself, the literature acknowledges that virtual incubation has a place in the overall scheme of things. Justin Boyd’s 2003 paper Assisting Non-resident Clients outlines the benefits of adapting incubation programs so that they may be offered to other businesses with the broader community. He suggests that such efforts could offer access to business advisors and mentors, access to networks of lenders, participation in workshops and seminars, and a range of administrative support services for home-based businesses. Kathleen Cammarata’s paper Incubators Without Walls is an industry standard, and describes a range of best practices in virtual incubation.

Such approaches are also seen as key drivers of additional revenue for the incubation program. The Waterloo Technology Accelerator, for example, houses some 19 incubator tenants, but involves another 47 companies in its virtual program, at an average subscription fee of $500 per month, adding more than a quarter of a million dollars annually to the centre’s bottom line.

In the end, the literature suggests that service provision should be regarded as a continuum, with services and structures designed to assist businesses as they progress form start-up to graduation. Rice and Matthews have summarized this as a five step approach to incubation planning:

Understand the common deficiencies of incubator companies Segment the population of incubator companies Develop a complete portfolio of assistance mechanisms Customize the delivery of assistance to each segment of the incubator

population and to each individual company within those segments Move companies through the assistance process and toward graduation from

the incubator



To be successful, the NFIC must adopt a specific menu of service options that it makes available to participants within the NFIC structure. These service offerings should be positioned to address existing gaps within the economic development support structures presently serving business generation and support, and be geared towards achieving specific and tangible goals and outcomes.

The underlying assumption in this approach is that individual companies, rather than an overall sector or cluster, must be the focus of activity. Although an incubator program may be set up with lofty and high level goals (youth retention, cluster development, technology commercialization), the success of the program lives or dies on the basis of individual company performance. Without successful individual graduating businesses, the incubator cannot meet the larger goals of the initiative. As a result, the primary focus of the incubation program must always fall on addressing the needs and challenges of the individual business and the individual entrepreneur.

Physical Characteristics of Incubators

Despite the wide range of incubation practices and approaches, there are some areas of consensus when it comes to the broad, physical characteristics of facilities at the centre of incubation programs. A 2002 study by the National Business Incubation Association found that North American incubators ranged in size from 500 square feet to 770,000 square feet. The average size was 47,157 square feet, while the median size was 25,908 square feet. In Forging the Incubator, Meeder repeatedly stresses that the evidence suggests that “Most business incubators that achieve self-sustaining operations have more than 30,000 square feet of net rentable space.”

Meeder’s study, however, assumes rental income as the primary source of operational financing for the incubator. Rice and Matthews suggest a simple formula for calculating the required size of an incubation facility that works across a range of models: determine the dollar value of the necessary total rental income line of the budget to sustain operations without a loss. Assume occupancy rate of 90% (for established incubators), an average collection rate of 95%, and a per square foot rental rate. Mix until the relevant figures emerge. Rice and Matthews’s method thus allows size to be adjusted on the basis of anticipated external revenues, from program fees, operation partner s and sponsors, or other sources of income. As a result, incubators with substantive external funding and support can successfully operate below the 30,000 square foot size.

Kathleen Boyd disputes the 90% occupancy figure, suggesting that a 75% to 80% figure is more realistic; demonstrating financial viability at this level is both more cautious, and builds a cushion for unforeseen events and circumstances. However, dropping the occupancy rate even lower (say, to 50%) is not helpful, as operations at that level begin to look unsuccessful and increase the challenges of recruiting facility tenants and participants. “You have to be 75 or 80 per cent full to convince people you have a project they want to be a part of,” she suggests. As a result, she strongly advises setting an occupancy goal of 75% by the end of year one.


Boyd is also quick to point out that the amount of space needed to operate the incubator and the size of the building containing that space are not the same thing. All facilities will include non-rentable space (hallways, elevators, etc.) and common use areas (including reception areas, conference rooms, kitchens, etc.) and usable or leasable areas. As a result, a 30,000 square foot incubator may occupy a 40,000 or 50,000 square foot building.

Boyd has created a checklist of site issues to consider during incubator facility selection. These include:

Ceilings, floors and corridors (are they high enough, wide enough and capable of bearing heavy loads? How much “dead space” do they create within the facility?)

Elevators and loading docks (are there enough?) HVAC (what’s its capacity and how old is it?) Utilities (are electricity, water, voice and data sufficient?) Fire Code (does it meet current standards?) Environmental hazards (does the site or the construction material itself pose

any risks?) Accessibility (is it accessible to people with disabilities?) Other site considerations (a lengthy list including drainage, highway access,

delivery vehicle access, zoning and parking)

Meeder also suggests that experience shows it is better to purchase a facility than to lease one. It is virtually impossible, he argues, to reach a point of sustainability of the incubator is leasing space itself, and then subletting that space to tenants. Such programs “find it very difficult to manage their programs on the margin and even more difficult to maintain a level of occupancy as their master lease reaches the end of its own initial leasing period.”

There is a relatively broad consensus that the physical space within an incubator should be “flexible;” that is, it should be capable of accommodating tenants as they grow (and contract) in terms of their physical space requirements. Some facilities accomplish this through the use of movable walls, or on-site contractors who can rapidly move fixed features within a larger building shell. Other incubators address the issue by moving tenants around as requirements change, or providing adequate space but in multiple dispersed locations within the facility. In either case, the structure must be operated with an eye to identifying and utilizing opportunities for flexibility within the structure.

Finally, the market has come to expect that technology incubators in particular will provide access to a certain set of shared infrastructure assets within the facility. The Southern Technology Council has published the following data about the nature of physical infrastructure practices in technology incubators:


Internet & Telecom Support

Special Technical Facilities

Software Libraries

Computer Technical Support

Machine Shop Facilities

Speciialized Equipment Leasing/Purchasing

Computer Equipment Leasing

Production Processes/Systems Development

0 20 40 60 80 100

% of Incubators Offering This Service On-Site% of Incubators Offering This Service Off-Site% of Incubators Not Offering This Service

Source: The Art & Craft of Technology Business Incubation

Tenant Identification Practices

The identification of tenants for incubation facilities is widely described as an art rather than a science in the incubation literature. As a result, it is often based on criteria related to the vision, mission and personality of the individual incubation program, and to the needs of the incubation program’s key stakeholders. This means that there is no single approach to tenant recruitment that will serve in any situation; recruitment programs must be designed to reflect the nature of the particular sector, community and facility underlying the program, and then further refined to best position the program to meet the pre-identified goals of the initiative.

Within this broad framework, however, some best practices have emerged. In his paper Selecting Great Clients, Brian Walker suggests that the incubator set clear criteria for tenancy, design a formal application and interview process for prospective tenants, and identify a “gatekeeper” who has the authority to make difficult “negative” decisions. He also identifies a long list of criteria that have been used by many incubation programs in the past, suggesting that companies are required to:

Have job creation potential Demonstrate a need for the incubation process Be founded on sound technical and business principles



The facility identified for the NFIC is much smaller than traditional incubators (15,146 sq. ft.), and must therefore be leaner and more efficient in its operations. At the same time, it must seek to offer a range of infrastructure assets that make it an attractive place to operate from for value-added forest operations. These assets include both forestry-specific facilities (technical facilities) and business-related assets including computer and telecommunications infrastructure and support, and shared resources such as library facilities.

Have a sound multiyear business and/or financial plan Have a working prototype or developed product Demonstrate that a market exists for their product or service Participate fully in the incubation program Have an owner/entrepreneur/management structure prepared to put personal

assets at risk for the company Have adequate resources to pay rent, salaries and overhead Be a good fit with the incubator focus and goals, and not in direct competition

with other tenants Pass a credit check Have space needs that the incubator can reasonably accommodate Have plans to remain in the community after graduation Have a business that helps meet local economic development goals Have environmentally safe products and processes Have a product or service for sale or use primarily outside the community Provide good wages, or provide good wages for the disadvantaged Demonstrate the potential to increase the local tax base Add diversity to the local economy Be committed to going public or grooming themselves for acquisition by a

third party Demonstrate that they will be able to sell their product with a profitable

margin

To this extended list, others have added consideration of the potential for youth retention within a particular community. While it is unlikely that any incubator would use all of these factors as criteria for selecting, identifying or screening potential tenants, most incubators will use a significant number of them in combination.

Rice and Matthews have developed a further tool for screening potential tenants, which they describe as a “Framework for Defining and Optimal Mix of Incubator Tenants.” This particular tool suggests that successful incubators will seek a good balance of firms in terms of both their growth potential and their “level of maturity with respect to critical success factor.” This level of maturity metric includes:

The strength of the firm’s management team The potential of the firm’s product or service The size of the available market The financial capacity (both dollar-wise and intellectually) to understand the

requirements of company growth

Rice and Matthews also suggest that incubators decide what mix of these firms is desirable, and should contain a mix of superstars, anchor tenants, up-and-comers and long shots. Superstars need minimal incubation assistance, but add


significantly to the incubator’s reputation. Anchor tenants require minimal assistance, but provide financial stability in terms of ongoing rents, and can assist with mentorship programs. Up-and-Comers are the bread and butter of most incubation programs, and are the companies that benefit most from incubation. As the true target of incubation, these companies often form the bulk of a facility’s tenants. Long Shots are assistance intensive, with low possibilities of success; however, they can add to the excitement and dynamism of a facility, and some long shots may have the potential to evolve into up and comers, and are therefore worth nurturing in some instances. Occasionally, incubators with a social mandate (employment of a disadvantaged group, for example) will have more long shots in their programs, though this is usually counterbalanced by higher external subsidies.

These factors are then plotted on an X-Y graph to differentiate between different types of firms:

Level of MaturityHigh

Anchor Tenants Superstars

Growth Low HighPotential

Long Shots Up-and-Comers

LowSource: Growing New Ventures, Creating New Jobs



The mix of tenants (or “participants”) in the NFIC must represent a balance of interests, but emphasize the selection of business, agencies and projects that are most likely to advance the goals of the centre. In part this means that tenant mix will vary with incubator focus (i.e. traditional incubator, accelerator or generator), while in part it suggests that a range of tenant types will be needed. The NFIC has some obvious anchors, but up-and-comers (for example) may be less obvious. At the same time, the emphasis of the incubation program (particularly in its early stages) must be on proving viability as a means of ensuring operational sustainability. This suggests a more-stringent-than-normal assessment of business and project plans prior to tenants entering the program.

From Incubators to Economic Development Clusters

Economic development practitioners have long embraced the concept of “cluster development” as a key component of their strategic activities. Introduced by Harvard University’s Michael Porter in 1990, cluster theory described the interactions of concentrations of interconnected businesses, suppliers and associated institutions within particular sectors of business and industry. Clusters may be defined in four ways:

Geographically (i.e. interactions within a specific region) Horizontally (i.e. interactions between businesses to share resources) Vertically (i.e. interactions based on supply chain management) Sectorally (i.e. interactions between businesses in a given business field)

Initially, the term “cluster” was applied only to large and significantly resourced industry concentrations, particularly the world leaders in given fields (such as Silicon Valley for ICT or Zurich for pharmaceuticals). More recently, economic development practitioners have taken to employing the phrase in a less grand sense, as a short hand for explaining the potential to grow local economies by building on areas of concentration and interconnectedness within their own community. This shift is discussed at length in a range of specialist literature, including Per Lundequist and Dominic Power’s 2002 paper Putting Porter into Practice? Practices of Regional Cluster Building: Evidence from Sweden. They suggest that economic developers “use the term ‘cluster’ as something of a buzz word that represents a shift away from narrowly focused firm-based strategies to more holistic regional economic development approaches...” They also argue that this activity, while not clustering in the traditional sense, has proven highly effective in a range of jurisdictions.

Cluster theory represents a significant shift in economic development thinking, as it suggests that a range of local actors – not just businesses - can play an important role in driving economic growth. As the US Department of Commerce has argued, “Cluster theory also describes how factors external to the firm impact competitiveness and innovation. It is not just the characteristics of firms that create a truly competitive cluster; there are regional factors external to the firm that matter as well.”

In 2004, Maryann Feldman and Johanna Francis argued that there are three basic stages of cluster formation. They describe these in Homegrown Solutions: Fostering Cluster Formation as:

The movement from latent entrepreneurship to active entrepreneurship The initial formation of the cluster


The development of a fully functioning entrepreneurial environment within an innovative and adaptable industrial cluster

By linking the early stages of cluster development directly to entrepreneurship and the “kickstarting” of enterprise creation, Feldman and Francis are rooting the cluster in the most basic of small and medium-sized enterprise creation tools, including incubation programs.

In recent years, economic development practitioners have repeatedly made the case that incubators and incubation programs can play an integral role in this latter capacity, as “external factors” that help to drive cluster development. Roger Miller and Marcel Côté discussed this function of incubators as far back as 1987: in Growing the Next Silicon Valley they specify the role that incubators play in creating “agglomeration effects.” Côté expanded on these ideas in his 1991 book By Way of Advice: Growth Strategies for the Market Driven World, in which he attacked the subsidy-driven incubation models of the day as ineffective, but passionately argued for the creation of incubation environments as a means of creating stronger models of networked and interconnected businesses within key sectors of the local economy.

Ultimately, economic development and academic opinion has coalesced around this latter concept: incubation allows for new venture creation in a fashion that increases the likelihood of entrepreneurial success. If incubation is sectorally targeted (as in a technology incubator, for instance) it will grow the number of firms within that sector. That greater number of firms will in turn “thicken” the networks active within that sector and community, grow the sector’s employment base, and attract players (both public and private) that seek to supply, support or study that specific sector. Over time, this agglomeration effect reaches a critical mass, and begins to take on a life of its own: the community becomes a desired destination for actors in a particular sector, rather than a place to which they are recruited. At this stage, the cluster is born, and becomes a major driver of economic activity in and of itself.

While it is certainly possible to engineer cluster creation activities without an incubator in place, the advantages of incubation of cluster development are clear. If nothing else, the incubator becomes a focal point of activity that allows local actors to focus or concentrate their sectoral activities in a common arena, thereby thickening the networks and relationships that will lay the foundation for the cluster itself. The fact that this occurs in a context designed to pursue the creation of new members of the cluster only makes the incubator a more attractive tool in the process.



The main focus of the NFIC facility would be its emphasis on business support to start ups, and towards the emerging accelerator and generator models, while the NFIC could maintain value added forestry product as a sectoral focus. To be successful, the NFIC must be recognized as a single piece of a much larger sector development strategy, including the allocations of resources and assistance beyond that offered at the NFIC.

Incubator Success Factors

In her article Ten Keys to Incubation Success Dinah Adkins articulates ten best practices underlying effective business incubator management:

1. Effective business incubation programs are based on legitimate feasibility studies and business plans.

2. Business incubators are service programs, not buildings. No building can grow companies, provide mentoring, and assist an emerging company in meeting benchmarks necessary for growth.

3. Top incubators are well-managed, which means they provide appropriate salaries and benefits to individuals who have the skills to help companies grow and transform their communities.

4. Flexibility and commitment to service are keys to effective incubation. Incubator staff members themselves must be entrepreneurial and non-bureaucratic and recognize that they are in the service industry.

5. Effective business incubator managers are proactive in provision of services. They screen clients, analyze their strengths and weaknesses, help set benchmarks for growth, and bring in mentors and business services provider to provide customized assistance.

6. A top-of-class program knows its mission, and its management, board, and staff clearly understand and work to support that mission.

7. The best business incubation programs are integrated into their community networks, resources, and economic development plans and strategies.

8. Top incubators adhere to the US-based National Business Incubation Association’s Principles and Best Practices of Business Incubation. These best practices include ensuring that management time is focused primarily on serving companies, rather than managing the building, raising money, or holding politicians’ hands.

9. Top incubator managers engage in continual learning.10.Effective incubator managers are committed, idealistic, and hard-headedly

realistic at the same time. They take a hard and honest look at their communities, roll up their sleeves, and get to work.



To be effective, the Dryden NFIC will have to remain cognisant of the fact that successful incubators focus their efforts on companies rather than the physical plant. From the beginning, the NFIC must have an in-depth feasibility study, business plan and of course, a mission and vision, which should be well understood and adopted by all staff at the centre. It will be critical for the NFIC to hire the best people to manage the centre and its programs, which will mean compensating appropriately. The Manager of the NFIC will be the key person to lead the centre and the businesses to success, and his/her selection will be very

Principles of Quality Incubator Management

In the same vein, Robert A. Meeder gives eleven solid principles for the Dryden NFIC to follow when establishing its incubator program. This material is adapted from his book Forging the Incubator: How to Design and Implement a Feasibility Study for Business Incubation Programs (1993).

A. Concentrate on developing support services that foster start-up businesses. Providing below-market rental rates should not be a focus of the incubator

B. Value the growth and development of individual companies beyond their ability to pay rent

C. The incubator should not be judged on the number of jobs directly created. Rather, it should be judged on the ability to create new business or nurture the growth of emerging companies. Successful growing businesses will create employment opportunities.

D. The incubator should be structured so that the property element takes a secondary position relative to programs since serving businesses is the core of quality incubation programs.

E. A positive cash flow stemming from successful incubator facilities management,

i. A centralized place for entrepreneurs to meet,ii. A focus for small business support programs in the community,iii. Opportunities for valuable interchanges among entrepreneurial

firmsF. These facilities should be viewed as on possible component of an integrated,

overall, regional economic development plan and be designed to reflect the strengths and weaknesses of the region

G. The structure of the incubator must be structured so that program outcomes match both the short and long-term benefits required by the sponsors

H. A clear mission statement with quantifiable goals and objectives tied to an evaluation process which rewards quality performance

I. The incubator requires highly-skilled, street-smart managers who are willing to wear a large number of hats, such as those of: general business counsellor, facilities manager, investment banker, etc



To be effective, the Dryden NFIC will have to remain cognisant of the fact that successful incubators focus their efforts on companies rather than the physical plant. From the beginning, the NFIC must have an in-depth feasibility study, business plan and of course, a mission and vision, which should be well understood and adopted by all staff at the centre. It will be critical for the NFIC to hire the best people to manage the centre and its programs, which will mean compensating appropriately. The Manager of the NFIC will be the key person to lead the centre and the businesses to success, and his/her selection will be very

J. Recognition that tension will be faced by the manager because this person functions both as an advocate for the companies and a landlord of the facility

K. The incubator should set up and run operational policies and systems in a business-like fashion.

6 Feasibility AssessmentThe first element of feasibility remaining to be addressed is the question of clarity of vision and focus. Are the goals for the NFIC clearly articulated, logical in intent and focused on reasonable and tangible objectives and outcomes?

Based on community consultations, and discussions with key stakeholders, it does appear that a common vision is emerging. There are several elements to the emerging consensus. Firstly, it is widely agreed that the primary focus of the NFIC should be on the support and development of new business growth leading to sustainable employment and environmentally responsible enterprises.

It is also acknowledged that while the forestry industry has a strong history in the area and is in need of new approaches to diversification and value added initiatives, this is not the only area in which the NFIC structure can be helpful. This simple declaration masks a host of complexities, but it speaks to the common understanding of an economic development objective that sees the community moving away from past practices and embracing a shift in direction moving the area from low-skill primary jobs into medium and high skill secondary and tertiary jobs. In theory, these secondary and tertiary job types will provide higher average incomes, spur additional opportunities for new venture creation, and widen the range of job



The NFIC must focus on strong support services designed to nurture new business development and expansion and growth of emerging ones. The centre must focus more on programming than on the physical property and support a system that encourages exchange of information, mentorship and business support. To meet all of these goals the manager must be carefully chosen with a range of skills and interests in business development.

prospects and opportunities for local people (including local youth and local First Nations workers).

On the face of it, the shift to a business generation incubator focus, including value-added forest products, is a common sense solution. The challenge comes in providing the necessary inputs to allow these new ventures and projects to emerge and take hold: this is the ideal role for the NFIC.

The NFIC can provide:

A mechanism for delivering appropriate project and business development support to new ventures

An entry-point for external partners bringing new technologies, innovative ideas or joint venture opportunities to enhance local value-added efforts

A facility that will serve as a network hub to bring together diverse and disconnected actors to improve information flow and deal making

A site where sector specific training and appropriate learning facilities may be made available to a wide range of industry actors and would-be actors who might not otherwise be able to access them

A focal point for efforts to address systemic issues and challenges for new ventures

NFIC is better positioned as a traditional incubator, in that its primary function is support and mentorship to new businesses. The NFIC facility is a generator-style incubation program in which resources and support structures are mobilized to strengthen activity within a particular economic sphere or cluster, as a means of driving community-wide economic growth. Like a traditional incubator, this may include a range of business support programs, and also includes a range of capacity-building, networking, market development and even project management efforts designed to enhance the community’s overall performance in the economy. Due to uncertainty in current forestry related projects and the unavailability of raw materials (fibre) it is unlikely that a forestry cluster can sustain itself as the primary focus of the NFIC. However, a primary focus for the centre should remain as natural resources including energy, mining, environmental industries, ecotourism and forestry as a speciality area of focus.

The project management role is a particularly telling one, as it underlines the notion that a generator is about economic activity and not about businesses activity per se. As demonstrated by the nGen case study, non-commercial projects may play a significant role in creating cluster effects and centres of excellence, thereby laying the groundwork for future business development opportunities. From this perspective, the NFIC should embrace a role as a generator for new business growth efforts in the Dryden area.


6.1 Challenges, Threats and ObstaclesA major component of any feasibility assessment is the identification of barriers and obstacles to implementation or progress, and a “risk assessment” of those challenges.

Challenge#1: Wood Supply

The single largest obstacle for the NFIC as originally envisioned is that any new value-added forest venture or project will require access to wood or fibre supplies in order to be viable. Under current management and governance systems, the source of these supplies is not evident. To address this challenge, it will be necessary for the NFIC to take a role in proactively addressing supply concerns. In this capacity, the NFIC should pursue the following three strategies, acting as a hub of value-added forest industry networks and actors:

Work with First Nations to establish cooperative access to wood or fibre supplies that they may control, for the purpose of mutually beneficial projects and ventures

Lobby government decision makers to modify the rules regarding access to fibre and wood supplies in Ontario, in order to strengthen the value-added sector and improve entrepreneurship and job creation opportunities

Identify opportunities to partner with businesses that do control supplies of wood and fibre, in order to demonstrate the potential value of joint ventures, new practices and support for social entrepreneurship

Challenge #2: Community Support

A common challenge in the establishment of new incubation programs is the development of community support, often vital to the success of facilities (like the NFIC) seeking to implement broader programs of work with cluster or economic development goals. While levels of “community-at-large” support for the NFIC initiative appear to be high and healthy, there are some potential concerns on the private sector side.

Among small and medium forest enterprises, and within the broader business community, support for the NFIC appears to be solid. However, large forest industry players are somewhat sceptical of the NFIC project, and (although not actively opposed) are likely to maintain some distance and separation from its operations.

To address this challenge, it will be important for the NFIC to quickly engage and involve these larger players – perhaps even engaging them individually for involvement in specific projects or research initiatives, as a means of building overall comfort levels and support. The model of the Saskatchewan Forestry Centre will be particularly helpful in this regard.


Challenge #3: Existing Sector Weakness

The forest sector in recent years has been characterized by significant declines in investment and employment, and by the accelerating loss of traditional markets, particularly in the United States. In light of current recessionary economic trends, this is likely to continue for the near to mid-term. This loss of traditional activity is one factor behind the desire to see the NFIC structure drive additional investment in the value-added arena.

In a sense, however, the NFIC project is an attempt to create something out of nothing; federal reports suggest that in a northwest Ontario forest sector of 12,500 jobs, only 179 jobs are related to value-added forest industries. This does not suggest a lot of “raw material” for NFIC to work with.

However, the NFIC model is based on the notion that many of the resources necessary to drive the development of the value-added sector – innovation, knowledge, technology, skill – already exist, but that it is necessary to create a “conduit” of sorts, through which these assets and resources may be channelled so as to support the emergence of the value-added sector. From this perspective, the NFIC itself is the solution to this particular challenge.

Challenge #4: Reliance on a Small Number of Projects

Successful incubation programs require multiple companies, clients and project seeking assistance to maintain viability. If they become too focused on a single client or project, they are extremely vulnerable to the success or failure of a single initiative.

There is concern that the NFIC project is over-reliant on the Two Feathers initiative as it is currently envisioned. To address this issue, the NFIC must become an active supporter of the Two Feathers initiative. If/when established, proactively and aggressively increase the number and range of forestry related projects within the NFIC to compliment other centre activities and natural resource ventures.

Challenge #5: Too Many Masters

Another challenge faced by the NFIC comes, in part, from the wide range of support already identified within the community. There is some risk of competing visions developing for the project – the ideas articulated by existing partners such as Seven Generations (for example) are not entirely consistent with some of the directions envisioned by other community players. These are not wide gaps – but subtle differences in perspective will need to be directly addressed in order to ensure that expectations are met.

One immediate potential impact of this issue is a good problem for the NFIC to have: the risk of over subscription for space within the facility. At the moment, there are more potential demands for space form project partners than there is


space available. While this speaks favourably to the financial viability of the project, it does suggest that further work is necessary in mediating demands and expectations among project participants.

6.2 Defining a Way ForwardUltimately, each of the potential challenges outlined in the previous assessment – or weaknesses in the NFIC model as originally envisioned – can be overcome. However, to overcome five challenges simultaneously places an enormous burden on the NFIC project, and runs the risk of undermining its fundamental viability.

The potential solution to this dilemma, however, is a refocusing of the NFIC to broaden its mandate beyond value-added forest industry opportunities into a entrepreneurial “enterprise centre” that provides a one-stop support service and incubation structure to a range of industries, including – but not limited to – the value-added forest sector.

This suggested approach is consistent with other recent economic development research carried out in the community. In 2008, the City of Dryden Economic Development Strategy Implementation Plan was presented by McSweeney & Associates, a firm of management consultants based in Ottawa. Their plan focussed on the following seven strategic areas:

8. Business Environment/Infrastructure Development9. Entrepreneurship and Small Business Support10.Community Preparedness: Community Awareness, Education and Labour

Force Development11.Centre for Exploration and Mining Services12.Renewable Energy13.Agriculture and Agri-foods14.Manufacturing

While most of the components of this Economic Development Strategy focus in other directions, there is strong support for the concept of a business incubator in this report, though not one centred on value-added forest initiatives. Under Strategic Theme #2 (“Entrepreneurship and Small Business Support”) the following action is recommended:

“That the DDC partner with key organizations to establish a full service small business enterprise centre and cooperate with PACE, PARO, Chamber of Commerce, surrounding First Nation communities, and other key community organizations, to collectively meet the needs of new entrepreneurs and existing small businesses, and to ensure there is no duplication of service.”

The full text of the Recommendation may be found in the Highlight Box on the following page.



Strategic Theme #2 – Entrepreneurship and Small Business Support

1. That the DDC partner with key organizations to establish a full service small business enterprise centre and cooperate with PACE, PARO, Chamber of Commerce, surrounding First Nation communities, and other key community organizations, to collectively meet the needs of new entrepreneurs and existing small businesses, and to ensure there is no duplication of services, Additional recommendations:

a. That the centre provide the following support for Dryden and First Nation area residents who are either thinking of becoming an entrepreneur, starting a business, or expanding an existing business:

i. A website with business resources (perhaps linked to existing resources)ii. Operating hours that are accessible to visitors as well as working residentsiii. Equipped working space and meeting space (computer, printer, Internet)iv. On-going small business training and workshops (i.e. unified store hours,

online business, business plans, market research etc.) as well as conferences such as Fuelling Innovation: Reigniting Entrepreneurship

v. Youth entrepreneurship programs which may decrease youth outmigration as well as create new businesses (seek partnership with school board and Seen Generations Education Institute)

vi. Mentoring program between successful business owners and new entrepreneurs

vii. Support club for new or aspirant entrepreneurs (i.e. breakfast club)b. That should additional space be available in the centre, that it be leased out to

organizations, agencies and professional services that support business start-ups or business development such as Employment Ontario offices.

c. That the help to minimize retail leakage through the following actions:i. Provide the survey tools and training needed to help businesses regularly

assess what products or services will meet the ever changing expectations of their customers

ii. To conduct a Business Vitality Index exercise to measure the business friendliness of the community and establish what actions need to be done to further support businesses.

2. That the DDC and key partners ensure that customer service training (such as the Super Host program) be offered regularly to front-line employees and managers of local public and private organizations

3. That the DDC work in cooperation with the Chamber of Commerce to help them achieve their strategic plan goals.

4. That the DDC help to reduce the burden of high business start-up costs by:a. Exploring mutually beneficial creative leasing alternatives with downtown building

proprietorsb. Revising current incentives and procedures of the community Improvement Planc. Exploring incentives related to taxes and utilities for new of expanding businessesd. Continue their efforts in working with Northern Ontario Enterprise Gateway (NOEG)

to establish an Angel Investment Network in Dryden.5. That the DDC and key partners regularly provide Fuelling Innovation: Reigniting

Entrepreneurship (FI:RE) conferences. The 2 day conference on innovation and entrepreneurship provides attendees an opportunity to network with resource people who have the expertise to assist individuals and small businesses to realize economic opportunities. The conference also provides information to grants/funding/credits/services available for both new and existing businesses.

6.3 Development of an Asset Map and Service Cluster Given this refocused mission for NFIC, it is possible to identify a clear roster of supporters, beneficiaries and participants in the incubation structure. Initially, these may be identified through an assets mapping exercise.

Asset mapping is a process used to create a detailed inventory and understanding of a community’s resources by studying local resources, networks, institutional assets, private sector actors, not-for-profit associations and other relevant attributes. Asset mapping for incubation structures can include (but is not necessarily limited to) the following:

Institutional resources including educational and training programs Technical institutions and industries Natural resource sector resources, including forestry specialization Business support organizations/networks Not-for-profit organizations Enablers and funders Knowledge transfer opportunities Research and development agencies

Once asset mapping is complete, it is often possible to see evidence of a “Service Cluster”. Essentially, this is a concentration of firms or assets able to produce synergies with the incubation program or facility because of their shared aims, overlapping program and service responsibilities, geographical proximity and interdependence. Industrial Clusters are believed to increase the productivity of companies, allowing them to be more competitive nationally and globally.

Generally, a cluster occurs when related firms, institutions or people gather together in an area (cluster) giving them a decisive, sustainable, competitive advantage over other areas. Service Clusters may provide many of the same advantages for economic development operations by concentrating resources and support systems in “one-stop” shops that facilitate access to support, mentoring and government programs.

One possible schematic of the Service Custer for the NFIC is shown on the following page, based on material developed by Dryden economic development staff:


This NFIC cluster model is significant because of the range of potential interconnections between each of the ‘pillars’ which is a solid framework for targeting and recruiting companies to the cluster. The NFIC may be attractive to companies, organizations and institutions that operate within one of the pillars, or that find themselves interacting with two or more. The centre will have a significant competitive advantage, however, when seeking to attract, grow or retain those companies, organizations and institutions that require or desire interaction with three or more of the pillars. The NFIC should focus on creating, developing and enhancing the interactions between the five pillars of the cluster. The NFIC incubation facility should be well positioned to offer expertise in all five areas or pillars in order to help spur cluster development and the various networking, training and support programs the emerge should be well positioned to help meet the needs of all five pillars, while simultaneously encouraging interaction between their participants.


7 From Theory to Practice: Describing the Operations of Incubators

7.1 StaffingThere are a range of potential staffing structures for incubators, but some general patterns have emerged. Both Boyd’s Developing a Business Incubation Program and Rice and Matthews’ Growing New Ventures, Creating New Jobs suggest a three-person staffing contingent is the norm. This team consists of:

1. An incubator manager or director, who focuses on facility, financial and program management, and all stakeholder and board relations

2. An assistant manager or program manager, who focuses on program delivery3. An office manager, often with some receptionist-style duties

Boyd suggests that the incubator manager needs three core skills: they must be a good manager of people, they must be outstanding communicators, and they must have their own entrepreneurial experience. She further suggests that the manager be a part of the process of hiring the additional staff, rather than all three being hired simultaneously. The need for direct entrepreneurial experience is also prioritized by Rice and Matthews.

Rice and Matthews are joined by Meeder (in Forging the Incubator) in suggesting that a common staffing mistake occurs in not providing adequate compensation to incubator managers in particular. Meeder suggests that this is best addressed by mirroring the pay rates of senior economic development staff within the community or region, and keeping pace with their salary increases. Failure to do so, it is argued, will eventually lead to under-qualified or lesser qualified staff assuming key roles within the operation, thereby compromising the incubation program’s integrity and long-term viability.

In many instances, economic development organizations, or other assistance providers, will locate offices within an incubator facility. This can reduce some staffing needs, by placing these stakeholders in the program delivery role, and thereby reducing the number of staff required. This arrangement can be successful, but does face several risks. Economic Development offices tend to be extremely busy places with broad mandates and limited staffing. As a result, incubation programs and tenants may get short shrift; this possibility is further exacerbated by economic development structures that report to political bodies such as city councils, where shifting political priorities can play havoc with work schedules and agendas. Additionally, because these departments often deliver programs to a wide


range of players throughout a community, it often becomes difficult to assess what special or additional programs are being put in place to assist those in the incubator itself. If all businesses in the community are accessing the same range of programs, it is difficult to identify the specific advantage of locating in the incubator. As a result, the literature is generally in agreement that while co-location and on-site economic development service delivery is a positive contributor to incubator success, it is not a substitute for a fully developed and adequately staffed service program.

In the case of the NFIC project, it is unlikely that initial revenue streams will support three full-time staff. The project team recommends a full-time manager or director be retained to oversee NFIC efforts and operations. Ideally the person employed in this position should have both natural resource sector and entrepreneurial experience. The manager also bears responsibility for strategic planning, fundraising, government and industry relations, and a range of other roles.

Supporting this position should be a programming manager, whose efforts are focused primarily on the development and delivery of the business support and networking activities. Initially, this position could be offered on a contract or even part-time basis. The office management role should be assumed in the short term by one of the NFIC stakeholders, such as the City of Dryden.

7.2 FinancingRice and Matthews’ work has identified four principle sources of revenues for incubation programs:

1. Rental income from companies2. Fees charged for business services3. Financial support or “investments” from one or more sponsors4. Fees (both current in the form of cash and deferred in the form of royalties

and equities) from incubator companies for management assistance

There is a broad consensus in the incubation literature that the primary road to financial success and sustainability for incubators is rental revenues. Although a variety of other mechanisms exist to secure additional funding, rental income streams play a significant role in the operating plans of most incubation facilities. This underlines the reality (discussed above) that the era of subsidized or low leasing rates within incubators is past; most incubators today charge rental rates at or above current market levels.

Most incubators also take advantage of two other revenue sources. The first is external stakeholder funding, in which various partners contribute to the costs of operating the incubation facility, either by funding specific projects, or by contributing to or subsidizing operating costs. This is usually done by direct cash payment, but can also be accomplished in some instances through in-kind


contributions or the secondment of staff. The second common revenue source is from fees collected for participation in programs and activities of the incubator itself. These are often paid by clients external to the incubator in order that they may take advantage of some the incubator’s programs and resources for their own business purposes.

The notion of royalties or equities is much more problematic, and the source of much debate in the literature. While it does represent an opportunity for additional income generation, it is fraught with significant problems.

Royalties and equities will often not represent a significant revenue stream (especially when an incubator may be entitled to very small percentages) for most incubating companies; those that work best are incubators designed to house and graduate extremely large firms. Royalties and equities are also very difficult and time-consuming to track on ongoing basis (especially in the post-graduation phase), and chasing them down runs the risks legal and accounting costs.

On a more problematic front, seeking royalties or equities creates a number of situations in which the incubator creates a potential conflict for itself. By taking such a position in a start-up, the incubator is actually making it more difficult for the client company to achieve profitability; some see this as a potential discouragement to entrepreneurs, and contradictory to the incubator’s economic development role, which seeks to make it easier to reach profitability. Such a trade-off may be acceptable to the entrepreneur, but usually only in situations in which the incubator is providing significant and substantive contributions to the bottom line of the client company. The “soft” services of most incubators (mentoring, teaching, and advising) are not generally enticing from this perspective, although “hard” services (access to specialized equipment, software or testing facilities) may be. Furthermore, the dilution of equity, or the payment of royalties may have the unintended consequence of making the company less attractive to outside investors, and thereby hampering opportunities for either investment or acquisition.

However, holding royalties or equities also creates another conflict situation for many incubators. Once an incubator is a “shareholder” in a company, the client relationship becomes blurred. For all intents and purposes, the incubator has become a part of the incubating company. This makes the decision to expel or remove a company from the program very difficult, as incubator management is essentially penalizing itself by any course of action it takes. By removing the company, it increases the likelihood that its equities or royalties become worthless; by keeping the company in place, it increases the likelihood that rental income or other incomes will be lost, and the facility will be further from sustainability. This conundrum has been cited in a number of specific cases – including incubation facilities at the University of Toronto – as a contributor to incubator failure.


Regardless of these issues, the reality is that most companies – even successful ones – will produce very little in the way of royalties, and that equities generally only have value in the case of acquisition (which is rare) or forced buyback (which is unattractive to entrepreneurs). As a result, even where such programs are introduced, they are generally not a significant contributor to the incubator’s bottom line. In general, the literature suggests, royalties and equities are generally only a factor at the highest end of the incubation market, in the multi-million dollar facilities likely to generate significantly-sized firms. Indeed, in a 1999 study of 8 US university incubation initiatives, this kind of income generated significant income in only one case:

Institution Income as % of Expenditures

Florida State University 34.7%Lehigh University 0.4%

University of Northern Iowa 0.8%West Virginia University 0.1%Wright State University 0.7%University of Michigan 1.4%

New Mexico State University 0.0%Virginia Tech 0.6%

Source: Universities and the Development of Industry Clusters

In his paper Equity and Royalty Agreements at Nonprofit Incubators, Justin Boyd suggests, however, that “Ultimately, the jury is still out on the value and appropriateness of non-profit incubators negotiating equity or royalty stakes in clients or graduates.” He strongly recommends retaining a specialized tax consultant to understand the potential ramifications of such arrangements within a given jurisdiction, as they may also compromise not-for-profit status.

While such arrangements are unattractive in the NFIC context, as an adjunct to the physical incubator, a virtual incubation program is highly desirable. The development of support programs for physical tenants will allow the retooling of these programs for an external community, broadening the reach of the incubation program, and adding a significant opportunity for additional revenues. When combined with availability of networking and creative space within a physical incubator, the delivery of virtual incubation programs can play a significant role in building a successful incubation venture. Such approaches are seen as key drivers of additional revenue for many incubation programs. The Waterloo Technology Accelerator, for example, houses some 19 incubator tenants, but involves another 47 companies in its virtual program, at an average cost of $500 per month, adding more than a quarter of a million dollars annually to the centre’s bottom line.

This leaves the NFIC in a situation in which three of the four main incubator revenue streams are potentially applicable:

1. Rental income from companies


2. Fees charged for business services, such as virtual incubation programs3. Financial support or “investments” from one or more sponsors

In considering the financial feasibility issue, the project benefits from previous work conducted as part of a pre-feasibility examination of the NFIC budget. This work, completed by Axiom Management Consulting in May of 2007, highlights the strong revenue potential of the NFIC model. Axiom assessed operating costs on the information provided by the facility’s real estate agent and other expenses that would reasonably be incurred with the operation of such a training centre. It did not estimate any costs for program delivery, nor did it assume any revenues from program delivery. It limited costs to the building itself, “so that a clear picture can be provided to the stakeholders.”

Description Amount Assumption Verification RequiredVariable expensesHydro 24,129 Real estate agent # of kilowatts used/# of metresGas 17,257 Real estate agent # of cubic metre usedMunicipal taxes 16,895 40% of existing rate City of Dryden re: educational designationBuilding superintendent Role is assumed by

an anchor tenantTotal variable expenses 58,281Fixed expensesCaretaker 34,320 $15/hr/2080 hrsBuilding insurance 14,000 $100/$10,000 Need actual quote based on amended usageLiability insurance 3,000 Estimate Estimate need actual quoteContent insurance 5,000 Estimate Need actual quote based on amended usageOffice expense 1,200 Role is assumed by

an anchor tenantMinimal allowance

Permits & licensing 500 EstimateMaintenance 14,000 Estimate 1 % of building costSnow/waste removal 6,000 EstimateProfessional Fees 3,500 EstimateWater & Sewers 4,000 EstimateTotal fixed expenses 85,520Total expenses 143,801Financial ExpensesDryden Development Corporation

42,500 $1,000,000 @ 4.25%

PACE 12,400 $155,000 @ P + 2% Estimated at 8%Total Financial Expenses

54,900

Total 198,701

Axiom selected the following rates based on input from all the key stakeholders:

$22.00 per square foot for the anchor tenants $200 per day for each individual conference room or $600 to rent the four

sections of the room $600 per day for the industrial training room $250 per day for one computer lab or $400 for the two computer labs

Tenant # of Square

Foot

Cost per Sq. Ft.

Lease Revenue

Anchor Tenant A – Business Development 1,000 $22 22,000


Anchor Tenant B – Natural Resources 795 $22 17,490Northern Forest Values Capital 680 $22 14,960Confederation College and Seven Generations 333 $15 4,995Total Revenues Anchor Tenants 2,808 59,445Other Revenues 5,550 139,256Total 8,358 198,701

Axiom assumed the following anchor tenants:

Anchor Tenant A is an initiative that would see the establishment of a business development centre including the attraction of businesses in the non-resourced based sector.

Anchor Tenant B will focus on delivery of programs and business support to resource development including forestry, energy, mining, and environmental industries. Current projects could include the Wood Tech Group Finland who would make use of the training facilities while working closely with our Canadian educational institutions who will also be tenants in the building. Also the ongoing Two Feathers Forest Products LP project is a potential tenant which proposes value added forestry exploration and would also utilize the training facilities provided by the learning centre.

The Northern Forest Values Capital is an initiative that encompasses the geographic area (Hwy 17/11 from the City of Dryden, north on secondary hwy 105 to the Town of Red Lake and midpoint between the 51st and 52nd parallel with Pikangikum First Nation) serviced by the Patricia Area Community Endeavours Inc and the Chukuni Communities Development Corporation located in Dryden and Red Lake respectively. Northern Forest Values Capital consists of seven organizations comprising First Nations, municipalities, colleges, universities, training institutions and Community Futures Development Corporations. They will require some six hundred and eighty square feet office space and will also make active use of the training facilities while interacting closely with Confederation College and Seven Generations Education Institute.

Confederation College and Seven Generations Education Institute would be asked to share the main entrance office and undertake the responsibility of building superintendent while obtaining lease rate concessions from $22 a square foot to $15 a square foot. The learning centre would have a full time caretaker paid independently from the services provided by Confederation College and Seven Generations Education Institute.

Axiom also made a series of projections concerning occupancy and utilization rates of various amenities within the NFIC facilities:

Occupancy Rate 100% 75% 50% 25%Conference Room (4 rooms) Average $600 138,000 103,500 69,000 34,500


Computer Labs (2 rooms) Average $400 92,000 69,000 46,000 23,000Industrial Training $600 138,000 103,500 69,000 34,500Total 368,000 276,000 184,000 92,000# of Days #230 #173 #115 #58

This allowed them to develop a set of ten-year financial projections. These were identified in the report as an “optimistic” forecast, despite the fact that Axiom has already identified tenants, and had not considered additional revenue streams (such as virtual incubation revenues) identified within this present report. Years one through three of Axiom’s projections are as follows:

Description Amount Comments Amount Comments Amount Comments

Revenues Yr 1 Yr 2 Yr 3Anchor tenants 59,445 $22 61,920 $23 64,395 $24Conference rooms 69,000 50% 75,900 55% 82,800 60%Computer labs 36,800 40% 41,400 45% 46,000 50%Industrial training 55,200 40% 69,000 50% 69,000 50%Total revenues 220,445 248,220 262,195

Variable expensesHydro 24,129 25,335 +5% 26,600 +5%Gas 17,257 18,120 +5% 19,025 +5%Municipal taxes 16,895 17,400 +3% 17,925 +3%Total variable expenses 58,281 60,855 63,550Fixed expensesCaretaker 34,320 35,350 3% 36,410 3%Building insurance 14,000 14,420 3% 14,855 3%Liability insurance 3,000 3,090 3% 3,185 3%Content insurance 5,000 5,150 3% 5,305 3%Office expense 1,200 1,235 3% 1,275 3%Permits & licensing 500 515 3% 530 3%Maintenance 14,000 14,420 3% 14,855 3%Snow/waste removal 6,000 6,180 3% 6,365 3%Professional fees 3,500 3,605 3% 3,715 3%Water & sewers 4,000 4,120 3% 4,245 3%Total fixed expenses 85,520 88,085 90,740Total expenses 143,801 148,940 154,290Dryden Development Corporation 42,500 42,500 0% 42,500 0%PACE 12,400 12,400 0% 12,400 0%Total financial expenses 54,900 54,900 54,900Total expenses 198,901 203,840 209,190Profit 21,544 44,380 53,005

Years four through ten are as follows:Description Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10Revenues +3% 270,060 278,160 286,510 295,105 303,955 313,075 322,465Variable expenses +4% 66,090 68,735 71,485 74,345 77,315 80,410 83,625Fixed expenses +3% 93,460 96,265 99,155 102,130 105,195 108,350 111,600Total variable & fixed expenses 159,550 165,000 170,640 176,475 182,510 188,760 195,225Dryden Development Corporation 42,500 42,500 42,500 42,500 42,500 42,500 42,500PACE Interest 12,400 12,400 11,453 9,273 6,912 4,355 1,587Total financial expenses 54,900 54,900 53,953 51,773 49,412 46,855 44,087Total expenses 214,450 219,900 224,593 228,248 231,922 235,615 239,312


Profit 55,610 58,260 61,917 66,857 72,033 77,460 83,153PACE principle 0 26,263 28,443 30,804 33,361 36,129Total principle 0 0 26,263 28,443 30,804 33,361 36,129Surplus 55,610 58,260 35,655 38,414 41,229 44,099 47,024

While individual elements of the overall financial plan may be questioned, Axiom’s exercise represents a reasonable assessment of the NFIC’s operating costs. In fact, if the City of Dryden’s contribution (and potentially PACE’s) is converted from loan to grant form, the NFIC boasts operating surpluses of about $100,000 annually, sufficient to finance some degree of staffing and programming. When other revenue sources are added, the overall viability of the project continues to grow.

7.3 GovernanceGovernance structures within incubators vary dramatically, and are primarily a function of two factors:

1. Legal requirements dictated by the chosen legal form of the incubator structure (i.e. not-for-profit vs. profit), which vary from jurisdiction to jurisdiction

2. Stakeholder requirements in which funding or service delivery is attached to some oversight or advisory role within the incubation structure.

Recognizing these broad parameters, the literature nevertheless leans toward governance by a small structure, usually a Board of Directors, often with as few as four to six members (although many incubators will have as many as twelve directors).

While a great deal has been written about the nature of incubator boards, much of it follows general principles of sound management. In her paper Cultivating Great Boards for the National Business Incubation Association, Ellen Gerl recommends clarifying board and staff roles, focusing on the incubator mission, selecting good board members, and keeping communications open. Rice and Matthews get a little more specific, articulating 5 key roles and responsibilities for a Board of Directors in an incubation program:

Develop and update a strategic plan for the incubator Set policies regarding the Board’s operation and the role of staff Manage external relations for the board and for the incubator Run political interference Take the lead in marketing the incubator in the community Work with the incubator staff to establish and manage the know-how network

of community experts Buffer the staff from the array of external distractions Support the business operations of the incubator Support the development of the incubator companies


To this, some would add a general responsibility for determining and monitoring the metrics of success for the incubation program. These will vary significantly depending on the focus of the incubator, and the particular goals of stakeholders and/or funding agencies. Common metrics for incubator performance measurement include:

Reaching or maintaining a certain level of occupancy Achieving a certain level of fundraising Launching specific services and programs Client company accomplishments Number and types of jobs created Number of graduate companies Number of graduate companies that remain in the community Reaching financial sustainability Total revenues of incubator clients Average salaries of incubator client/graduate employees Local tax revenues paid by clients and graduates Number of student interns working within the incubator Number of university or college technologies that were licensed and made it

to the marketplace

In her paper Evaluating Incubator Performance and Measuring Impact, Kathleen Cammarata also makes a strong case for introducing a range of tenant or client satisfaction surveys and metrics.

None of these functions appears to represent an onerous or off-putting set of obligations in the context of the NFIC. In fact, as the initiative moves forward, it is likely that many members of the existing project steering committee will be actively interested in a formal role in the final governance structure. This reality has been underlined by discussions as the steering committee level. With one or two exceptions, current committee members have indicated a willingness to participate in future governance structures.


8 Strategic Directions8.1 Establish a Common Vision and MissionIt will be critical for all partners to seek the approval of the overall program from governing bodies (i.e. Board of Directors, elected Councils, etc.) in order to formally incorporate the development of this incubator centre into their long-term strategic plans and budget processes. Without this explicit recognition, the initiative will be vulnerable to changing political processes and shifting priorities.

While the preliminary goals of the NFIC are understood by the steering committee, it will be helpful to clearly articulate the goals and objectives which include:

Project and business development support New technology development, innovation and joint venture

opportunities to enhance value added A network hub for the accurate and convenient dissemination of

information Sector specific training and other educational ventures


Focal point for business interaction and resolution Business support and research and development programs dedicated

to the natural resources sector including forestry as an area of specialization

Recommendation: It is recommended that the NFIC should establish a specific meeting (ideally facilitated by an external party)for the purposes of formalizing a common vision and mission, examining each of the objectives in detail, and articulating strategies for ensuring the success of future programs.

8.2 Establish a Workplan for IncubationThe creation of an incubator does not occur immediately; it must be based on a commonly understood workplan and process, with elements phased in as the initiative progresses. The logical flow of this workplan is as follows:

6. Establishment of a Short-Term Incubator Development Plan

The NFIC steering committee should move immediately to implement a short-term (3-5 year) approach to developing an incubator or generator, with the goal to develop a long-term program over time. This plan should focus on the creation of the NFIC incubator including shared space with other service providers and support agencies. Space will include room for:

a. Anchor tenantsb. Smaller companies or initiativesc. Shared space for networking and meetingsd. Training arease. Operations and staffing

The purpose of the short-term strategy should be to design and begin delivering targeted business support, to identify and obtain qualified incubator staff and to begin promoting the existence of the incubation program in Dryden.

7. Development of a Full Marketing and Promotional Plan

The implementation of a plan to create the short and long term strategies will require the simultaneous development of interlinked marketing initiatives, including:

a. Attracting and maintaining support from senior decision-makers within the stakeholder group

b. Attracting interest and participation in the NFIC generatorc. Attracting tenants to the incubation facility


d. Communicating the role and objectives of the incubation program to the broader community, as a means of building public support for the initiative

e. Attracting well-placed political and bureaucratic support to the project as a means of enhancing access to external funding, expertise and recognition

While this marketing strategy will be carried out by the NFIC stakeholders, it is likely that external professional assistance will be required for some elements of the program.

8. Establishment of a Physical Incubator

A physical incubation facility provides an important venue for supporting individual business support and entrepreneurial guidance, which creating a showcase for success stories and a focus for ongoing efforts. It also provides a key revenue stream to assist with operational aspects of an ongoing incubation program, as well as dedicated space for events, networking activities and future projects and initiatives.

9. Establishment of a Virtual Incubator

A virtual incubator creates highly valuable support system for new business development by enhancing communications and providing all the support and networking services of a physical tenant. Virtual incubation programs can lead to sustained financial support as well as increasing the number of participants in the centre significantly. Virtual tenants may also lead to residency in the incubator program.

10.Establishment of a Long-Term Incubator Development Plan

Using the success and challenges of the pilot short-term incubator as a test, the NFIC steering committee should develop a formal plan for the creation of a larger incubation program.

Recommendation: It is recommended that the NFIC should create a business generation project in Dryden immediately with a pilot project, and scaling up to a larger operation within 3-5 years.

8.3 Establish an Entrepreneurial Cluster through the NFICThere is strong consensus among the NFIC stakeholders that an incubator is not the sole goal of their partnership. The incubator has a significant role in the execution of the goals but is part of the process to position the Dryden generator as the centre of a strong and growing entrepreneurial cluster. In the process of research, Millier Dickinson Blais has determined a ready cluster structure already present within the region representing five pillars of the cluster:


6. Education and Training Institutions/Programs which focuses on skill development, technology transfer and innovation

7. Enablers and Funders who will provide the financial and in-kind support to successfully run the venture

8. Business Support and R&D Networks and Organizations who will be key in developing strong and successful businesses

9. Natural Resource Sector Resources specializing in Forestry Sector Development which will draw from the tremendous history and future of these assets in the area and the bank of already existing resources and experts

10.Technology Based Organizations and Businesses which focus on the development of technical and technological tools that support the business generator

Dryden is very fortunate to have all five pillars of the cluster well represented with strengths already developed in these areas. This suggests that an incubator facility is well positioned at this point and further suggests that by initially focusing effort and activity on the specific task of creating an incubation program, the overall capacity of the emerging sectors to consolidate, expand and mature over time is significantly enhanced. In short, the incubator lays the foundation for a larger cluster and cooperation around the incubation program provides a model for future efforts and growing the cluster. The incubator program itself plays an important in achieving these goals by:

1. Providing physical space thereby providing opportunities for participants to interact establishing new relationships, and exchanging information and ideas.

2. The combination of physical space and incubation programming allows for deliberately designed and targeted networking initiatives. As the formal portions of coordinated networking activities take root, the opportunities for informal networking and secondary projects and initiatives will grow exponentially.

3. Creating an environment for joint programs and projects as the cluster begins to grow and develop. As the program matures, there will be an ongoing and increased need for project and programming space for a variety of initiatives.

4. Creating a focal point for attracting external resources creates a formula that makes the region a more logical destination for the delivery of a wide range of external resources, including financial support and project funding, human resources support, political support and corporate activity. The fact that a facility, program and structure exists creates an appearance of longstanding and ongoing activity thereby reducing risk and increasing the likelihood of


support including funding, future human capital, and stronger and more sustained partnerships with the private sector.

Recommendations: The Dryden NFIC should position the incubator/generator as the centrepiece and anchor for a larger ‘cluster development’ strategy.


9 Implementation & Action PlanThis action plan focuses on a three-year process for rolling out the incubation and cluster development program in Dryden. However, as a prelude to this larger process, there are a number of immediate actions that should be undertaken to initiate the broader program.

9.1 Preliminary StepsThe bulk of this action plan revolves around a three-year process for rolling out the incubation and cluster development program in Dryden. However, as a prelude to this larger process, there are a number of immediate actions that should be undertaken to initiate the broader program.

Action 1A: Prepare and submit funding applications to relevant government agencies to help launch the NFIC’s incubation programs. Funding is potentially available for the initiation of projects and programs for the NFIC incubator. This is a significant opportunity to move the larger cluster development process forward.

Action 1B: Develop key components of an early marketing message. As long-term support will hinge on short-term success, it will be critical to communicate early positive messages. Wherever possible, the messages should come from a partner in the private sector (or from senior roles in stakeholder institutions) Message should include among other issues:

Communicating the economic development benefit of the project, with a particular emphasis on business development and entrepreneurship

Articulating the links to the resource sector of the area and the potential advances that can be made to develop new value added ventures and emerging enterprises

Emphasize the area’s existing strengths focusing on partners and supporters

Position the centre as a centre for training and development

Action 1C: Prepare a formal Business Plan for the proposed NFIC generator. Although much of the content needed to create a formal business plan can be found in the pages of this report, it is not intended to be a formal business. The creation of a formal plan, complete with detailed 3 year financial projections, will be a necessary first step in launching the short-term program.

9.2 Preparing the IncubatorThe physical space provides a focal point for activities and a tangible demonstration of the program’s economic impacts to outside observers.


Action 2A: Prepare the incubator through an analysis of the physical space and the operating vision for the centre. The NFIC should cooperate with local organizations and stakeholders to partner in the planning of the one-stop business centre in Dryden.

Action 2B: Develop a technology support strategy for the centre to identify and put in place the necessary technology tools to assist in the facility’s operations. The presence of specific tools and technologies within the incubator may make it more attractive to target companies, and may help to facilitate cluster development activities emerging from the incubator.

Action 2C: Local colleges and training institutions should consider relocation of programs to the NFIC centre in a manner that supports and enhances the incubation program. Local educators should proactively seek to link with both short- and long-term incubation opportunities, in order to maximize their contribution to the NFIC generator.

Action 2D: Begin planning for the transition to the long-term incubation strategy and program. Although the initial focus of activity needs to be on the launch of the interim, or short-term, strategy, the planning of longer-term activities must begin immediately.

9.3 StaffingTo effectively deliver the programs and activities envisioned, the NFIC will need to recruit a professional staff capable of playing specific roles within the emerging structure.

Action 3A: Hire an incubator centre and project manager. A senior-level professional with significant economic development and project management experience must be hired to lead the project implementation process. Incubation best practices suggest that this individual must have entrepreneurial experience, and in this instance will ideally have at least some previous experience with or understanding of business support. This should be a full-time, permanent position, with an annual salary in the vicinity of $50-$60,000 plus benefits.

Action 3B: Hire project officers and centre staff. To start, one professional project officer to deliver programs and manage projects should be retained. While the specific expertise needed in these roles is not as sophisticated as that required of the lead manager, project officers should be capable, qualified people. It may desirable in this instance to second these staff from stakeholder organizations. The number and focus of


these positions in the future will be determined based upon funding and project load; however, at least one person will be required to design and deliver the incubation programs themselves, while others may retained with a stronger project focus. An office manager is also required, ideally with some administrative and organizational experience. Staffing efficiencies can be realized depending on the composition of the tenants and their resources. The financial management of the project can be assumed by a stakeholder partner. Incubation literature strongly recommends that the overall manager be involved in the hiring process. These positions could be a mix of permanent, full-time staff and seconded or contract staff. Compensation may vary by responsibility and qualifications, but should be between $35-$45,000 plus benefits.

Action 3C: Plan to hire students and part time staff. As individual projects and programs are funded, it may be necessary to increase staffing levels through the use of part-time, temporary, or seconded staff. This would include staff supported through a range of provincial and federal government work creation and wage support programs. Co-op placements, teaching or graduate assistantships, internships, summer jobs and class projects are all sources of student input into the incubation structure, and should be pursued and developed at an early stage. To the greatest extent possible, this student input should reflect the cross-disciplinary goals of the cluster development process. To this end, special emphasis should be made to involve student organizations in entrepreneurial activities.

9.4 GovernanceEffective governance of the incubator relies on having appropriate management structures in place. The following initial steps are recommended to help accomplish this.

Action 4A: Establish a not-for-profit corporation to deliver programs and administer the incubator. A not-for-profit corporation establishes some legal protections for project stakeholders, while maximizing eligibility for government funding programs. It is a relatively simple structure to establish, with a well-defined set of rules to follow from a legal and financial reporting perspective. In those rare instances where funding programs are not available to this structure (e.g. municipalities only or universities only programs), the not-for-profit structure may be incorporated into proposals as a project partner, rather than the project lead.

Action 4B: Elect a Board of Directors. A relatively small board of 10-12


members is ideal, with the incubator manager serving as an additional ex officio member. One seat should be reserved for each of the project stakeholders, with the remainder to be nominated by those stakeholders in order to represent and liaise with key stakeholder sectors (e.g. legal services, accounting services, the investment community, the business community, other interactive business and support organizations, etc.). The Board should meet bi-monthly, with an executive meeting monthly, and day-to-day operational oversight of the program left to the management staff. The incubation literature is clear that a Board must provide direction, but should not become involved in day-to-day operations.

Action 4C: Define a Financial Management structure. Rather than retaining its own financial management staff or hiring external resources for this purpose, the program should “piggyback” on the existing financial structures within one of its stakeholder organizations. It is recommended that the City of Dryden Business Office or other financial department within the city’s structure assume this role.

9.5 Moving from Incubator to Development: Programming the Incubator

Although a physical incubator is an early focus of activity, it is meant as a driver of additional activity that will spur wider economic development. From this perspective, the programming of the incubator must begin with a focus on internal operations and tenants, but rapidly and increasingly move its focus to external programs. To some extent, the development of internally-focused initiatives lays the groundwork for these external programs, but in other instances, the relationships created for the purposes of incubation become a framework for broader development activity.

Action 5A: Develop an Incubator Tenancy Program. Depending on the findings of the stakeholders in Action 2A, the incubation literature suggests that early occupancy rates are often seen as a metric of long-term performance by the community. It is therefore imperative that these spaces be filled as rapidly as possible, with a goal of 70% occupancy by the end of year one as a minimum objective. In keeping with Section 6.4 Financing, the facility should charge full market rent, and should encourage rapid graduation from the facility. Companies should be limited to three year’s tenancy, with the option of remaining for up to two additional years at the Board’s discretion.

Action 5B: Develop a suite of incubation support programs, beginning with a focus on tenant needs. The Dryden NFIC generator should develop


a wide-ranging suite of support programs and services to support businesses within the incubator. These would include (but not be limited to) programs that would provide the following kinds of support:

Mentoring services Business planning assistance, business counselling and business

advisory support On-site education and training opportunities Interactive lunches and activities designed to enhance connections

between incubator tenants and stakeholders Access to service providers in legal, financial, technical and

marketing fields Access to key researchers and faculty at local training institutions Administrative support services Access to small business resource library

Action 5C: Adapt the physical incubation programs for a virtual environment. Once the physical incubation program is developed, it must be adapted for virtual use, with the goals of providing similar services for non-resident clients on a fee for service basis. Virtual tenancy will also include administrative services such as address, telephone/fax/mail services, a web presence, meeting room access and involvement in all programming and networking activities. This action will enhance the overall financial viability of the incubation program, while greatly increasing the reach of the cluster development efforts, and dramatically increasing the number of firms and entrepreneurs involved. Ideally, this service will have a $100-$200 per month price point in Dryden, with a target of 10 participants by the end of its first year of operation.

Action 5D: Establish a business development and financing network. To facilitate the growth and development of companies participating in the incubation programs, the Dryden NFIC should move to establish a formal committee or network of individual financial institutions, and sources of venture and angel funding with an interest in enhancing the business development sector in Dryden. This network should meet on a bimonthly basis, and should include:

Local representatives of banks and credit unions Representatives of relevant investment funds and lending

organizations Representatives of area angel and venture groups Prominent local angels and investors

The role of the network is not strictly to provide access to funding (though it may in some instances), but to provide early and ongoing feedback concerning funding strategies and opportunities to participants in the incubation programs.


Action 5E: Initiate a range of student programs through the incubator. Active participation of Confederation College and Seven Generations Education Institute in the cluster development initiative opens the doors to the creation of a range of creative and innovative roles for students. As the development of a true cluster requires a wide range of activity within a sector to occur, channelling the research, work and social activities of students in this direction will both expand the extent of activity, but also strength the overall cluster development efforts. Potential roles for student activity include (but are not limited to):

Co-op placements within the incubator, or within incubating companies

Entrepreneurial co-op opportunities, as currently allowed by the University of Waterloo

Use of contests and competitions to identify potential business opportunities

Incubation space as focus or workspace for class projects and individual research initiatives

The launch of student organization with interest in or links to activity in entrepreneurship

Hosting conferences, meetings and special events related to entrepreneurship

Approaching companies with an interest in student entrepreneurship, in order to create on-site partnerships and program opportunities, such as the partnership between students, Microsoft and Infusion Angels at the Waterloo Accelerator Centre

Action 5F: Initiate a program to enhance business development and entrepreneurship linkages in the region. Although Confederation College have business related programs, there is a gap of programs to develop the entrepreneur or nurture business ownership as a career. Additionally, there is a lack of programs in the areas of forestry and other natural resource sector development. Confederation College and Seven Generations Education Institute should commit to develop and undertake programs facilitating formal and informal introductions, opportunities for collaboration, and partnerships, all using the incubator as a focal point (and even rationale) for interaction.

Action 5G: Create a program for the natural resource sector (highlighting the forestry sector) to extend and broaden its links to the industry as a whole, with an emphasis towards increasing opportunities for collaboration. Continuing changes in the natural resource sectors will necessitate innovation and strong liaison relationships and cooperation with other industry participants in this sector. Exploration should also take place to continue relationships with the Finnish/First Nations project


– Two Feathers, and explore all possibilities of partnership ventures in the future.

Action 5H: Establish a long-term Incubator Development Plan. Using the operations of the small incubator envisioned in the short-term plan as a pilot project and test program, the Dryden NFIC should develop a formal plan for the modification of the centre structure if desirable and a new incubation program designed to advance existing businesses and introduce new programs and projects to the centre.

9.6 Promoting the NFICAs the program grows and develops, it will be vital for the Dryden NFIC stakeholders to make its presence known to increasingly wider circles of potential partners and stakeholders. Part of this is through communications and promotions, but an emphasis must also be placed on carefully targeted marketing efforts linked to the success of key elements of the overall incubation and cluster development program.

Action 6A: Develop and deliver a marketing program to bring companies to the incubation program, both physical and virtual. A marketing program must be created that will make companies aware of the Dryden NFIC programs, and encourage them to participate. The focus of these efforts will initially be within the Region, but will ultimately need to broaden out to external communities and targets as the program becomes more established.

Action 6B: Develop and deliver a marketing effort to make participating companies aware of specific activities with the program. Once companies have signed on to the incubation initiative (whether physical or virtual), there must be an ongoing effort to keep them informed of and involved in all potential activities within the broader incubation and cluster development programs. Failure to do so will harm cluster development efforts, and may lead companies to take a negative view of their (incomplete) incubation experience. This marketing effort must be proactive, company- and entrepreneur-focused, and cost-effective.

Action 6C: Develop and deliver a marketing effort targeting area students. There are two elements to this recommendation. First, Confederation College and Seven Generations Education Institute must develop marketing efforts targeting their own students, and making them aware of specific opportunities within both the incubator and the larger cluster development initiative. Secondly, given Dryden’s commitment to youth retention and skill development issues, there should be an outreach


program connecting with younger students in schools across the Dryden region, introducing them to local business development and entrepreneurial choices and helping them to understand the opportunities before them.

9.7 Financing the IncubatorAction 7A: Prepare detailed budget estimates for an ongoing incubation facility. As the larger incubation programs is established (whether physical, virtual or both), detailed multi-year financial projections will be needed to adequately plan activities within the available budget envelope. While the budget figures are likely to be significant, there are also significant supporting resources available. All Dryden NFIC stakeholders must indicate a willingness to commit to an annual operating contribution to the incubation budget. Such contributions provide a key starting point for developing a long-term financial plan, and for leveraging additional funds from external sources.

Action 7B: Build commitment to the concept of stakeholder operating grants. Although there are numerous potential revenue streams available to support the development of the NFIC, these do not eliminate the need for stable, ongoing financial support from the centre stakeholders. Strong funding commitments from established partners both enhance the project’s overall sustainability, but are a necessary platform for the delivery of any additional funds from outside sources. Such arrangements are also the norm in the industry, as evidenced by the financial structures of facilities such as the Hamilton Incubator of Technology, The Toronto Business Development Centre, and Markham’s Innovation Synergy Centre. While the actual contributions of each partner may vary, success depends upon each partner making a significant, ongoing commitment to the program.

Action 7C: Establish key revenue streams to support the incubation operation. An incubation program in Dryden can draw on many additional streams of revenue to support its activities, many of them ultimately dwarfing the size of the contributions coming from the stakeholders themselves. These contributions can fall into several categories:

Project funding – a physical incubation facility can become a facility for housing project work, particularly work emerging form Confederation College and Seven Generations Education Institute, which will be eligible for a wide range of funding programs from senior levels of government (and from industry sources. Such funds could provide millions in revenue annually, with a portion being hived off to support the operations of the facility, its staff or its


incubation programs. Rental income – a physical incubation space provides an opportunity

to generate revenue from rental incomes as companies and projects acquire space within the facility. Adhering to the principle of charging full commercial rates for space, a downtown Dryden location suggests that approximately $22 per sq. ft. will be generated from each anchor tenant.

Programming income – many other operations have successfully developed virtual incubation programs in which non-resident as well as resident businesses are able to access the incubation programs themselves, in exchange for a monthly or annual fee. For example, 20 off-site businesses paying $100 per month to access ongoing incubation programs through the proposed facility would generate some $24,000 in revenues annually. When fees and charges for one-of events and special activities are also factored in, the potential is again significant within the overall scope of the project’s budget. Furthermore, if run effectively, this program can represent a growing revenue stream, as more companies enter programs, and as the recognized value of the programs increases, allowing for higher fees.

Licensing income, royalties and equity – some incubation programs and facilities have generated additional income through the negotiation of licensing income, royalty agreements or the acquisition of equity involving companies within their incubation programs. This is not recommended in the Dryden case for a number of reasons. It has been shown that when incubation programs are too directly tied to the performance of participating companies, it is difficult to make sound decisions as to continued participation when it may not be warranted. At the same time, the loss of revenues (however potential) acts a as deterrent for companies to enter the incubation program, with the largest deterrent effect found among those companies with the greatest potential for success. Finally, the administration of the legal and accounting infrastructure necessary to support such arrangements can be onerous and costly, while producing (in most cases) only negligible financial returns.

Action 7D: Establish a strategy for tax minimization. In other jurisdictions, a significant line item in the operating budgets of incubation facilities is often local municipal taxes. This figure is $90,000 per year for the Toronto Business Development Centre and $50,000 per year for the Waterloo Accelerator Centre, for example. Given the participation of local government in this project and the contribution to the local economy, there exists a workable and significant opportunity to strengthen the project’s overall financial position if arrangements can be made to


eliminate this expense from operations in Dryden.

9.8 Measuring SuccessAction 8A: Set and review annual benchmarks to determine the success of the incubator. An important final step in this process is to create a system of metrics to determine achievements and areas of needed improvement for the program. It is recommended that several analysis tools be developed to establish a set of metrics for the program, including:

Physical incubator occupancy rates Incubator graduation rates Number of jobs created Number of jobs of graduating companies remaining in the

community Money flowing through the program (projects and investment) Number of participating companies (physical and virtual) New tax revenues

Additional metrics may be adopted to address the initiatives larger goals, such as downtown revitalization, youth retention, etc.


10 Appendices10.1 Appendix A – Community Consultation Survey ResultsQuestion One: What should the regional forest industry look like in ten years?

For question # 1 our Project Team wished to illuminate how the participants viewed the regional forest industry in the future. Responses enable the project team to understand future trends and issues, and to build a sense of how Dryden can be a successful player in the forest industry for years to come.

The participants identified several visions of what the forest industry will be like in the near future. The first focus was on how to market forest products that can be potentially sold externally, and a determination of which products are in demand or will be in demand in the future. The specific comments are as follows for Marketing:

Marketing products to new international markets Stronger understanding of market needs & wants, resulting in better overall

marketing Know & understand what we can make from the forest

The next focus by the respondents was on determining who will be employed in the forest sector. The specific comments were as follows for Employment:

More employers and entrepreneurs Refocus thinking from production to jobs Improve business skills, and encourage entrepreneurial risk-taking

The consultation group moved forward to look at the present corporate and market structure governing the forest industry. Questions of business size, external and internal relationships, and supply agreements were the spotlight for defining corporate structures in the forestry industry. The specific comments were as follows for Corporate Structures:

More small companies Improved relationships between primary industry and small entrepreneurs Revisit supply agreements to improve industry security and stability over the

long-term Improved cooperation with unions and labour


Questions surrounding the supply of fibre and raw materials to the industry were the next topic of discussion. Important questions of how the supply will be accessed and how the supply should be used were discussed. The specific comments were as follows for Supply:

Forest freed up to allow entrepreneurs to get access Use forest resources more effectively and completely Develop a detailed inventory of forest resources with a product focus (i.e.

merchantable volume) rather than a biological focus

Value-adding, or the process of increasing the factors of production (land, labour and capital goods) to increase the value of a good, was discussed. The specific comments were as follows for Value-Adding:

Direct more wood into value-added opportunities Think about how we add the MOST value Not competing with China, etc. for low-value business – focus on high-value

opportunities Understand how and why our wood is competitive (strength, etc.) Focus on whole-tree technology Focus on highest and best use Introduce value-added concepts early in high school training

Knowing that current product ranges may not be sufficient to adequately increase sector revenues in the future, the respondents discussed how to develop new products for the forest industry. The specific comments were as follows for New Products:

Electricity and Biofuels industry developed Bioplastics opportunities explored Find uses for waste product/unused resources Explore underutilized species such as Eastern Cedar Strengthen medical and medicinal research connections, especially to

Thunder Bay Biorefining an emerging industry More Non-Timber Forest Products

Taking the approach that learning from other regions or company experiences is a great way to gain insight into where the industry is headed, the respondents noted that industry best-practices should be investigated. The specific comments were as follows for Best Practices & Improved Knowledge:

Learn best practices from others Learn from past practices (good & bad) Study best training and education practices from other jurisdictions (such as

Finland)


The concept of innovation, or the process incorporating new ideas and technologies into the forestry industry, was discussed. The specific comments were as follows for Innovation:

Improved access for innovators to decision-makers

How federal, provincial and municipal governments should participate in the forest sector and how their roles should be defined were both discussed with the respondents. The specific comments were as follows for Government Role:

Political climate that supports necessary change Improve tax advantages to support corporate research & development

Looking into environmental issues was the next focus. The respondents understood that mitigating environmental impacts, building a culture of sustainability and providing “green” products were all future needs for the forest sector. The specific comments were as follows for Environment:

Build a sustainable, “green” and environmentally-friendly industry and reputation

Explore carbon offsets Promote renewability

Question Two: What do we need to do (action steps) to get there?

Describing how the forestry industry will look in the future was the initial focus for the community consultation; the second step was determining what the Dryden region will need to do to be successful in the future. This stage of the consultations involved outlining the specific actions required to get from where the community (and local forest sector) is today to where it needs to be in the future in order to take full advantage of the opportunities identified in Question One (above).

Data tools are necessary implements that allow for further research and more detailed research in the forest sector. These tools include geographical information systems, land surveys, and private/public studies and inventories of the forest industry. The specific comments were as follows for Data Tools:

Proactively collect and shared scattered data Open private research results Do more work on the analysis of the forests – spatial analysis, but also look at

emerging technologies (GIS, DNA & genetics, etc.)

The ability to access capital, loans, and business planning/resources are vital financial tools that were seen as important for moving forward. The specific comments were as follows for Financial Tools:

Improve access to financing


Educate youth on young entrepreneurs program and financing Look for higher returns to attract investment

A changing forest sector also requires a changed workforce. Increasing the pool of available labour, as well as the skills and capacity of those labourers, and implementing mentoring opportunities all fall under the umbrella of human resources. The specific comments were as follows for Human Resources:

Employ product and process designers Encourage multi-skills and multi-trades among workers Provide mentoring to entrepreneurs Change the culture to value high skills over cheap labour

To create the new workforce, and engage directly in skills building and upgrading, a range of new education, training and skills development programs will be required. The specific comments were as follows for Education and Training:

Support knowledge transfer Identify the products that the world needs (or will need) – find out who has

the knowledge behind these products, and bring them here to train us

Increasing the ability to meet and interact with local business owners, entrepreneurs, and labourers is the process of networking. The specific comments were as follows for Networking:

Help the sector become better connected Share knowledge and ideas with entrepreneurs in the forest sector Move from talk to action Help Toronto-based decision-makers build a stronger understanding of the

issues

Institutions include non-profit organizations, educational organizations, and government agencies, and each will have significant roles to play in enhancing the performance and effectiveness of the forest sector in the future. The specific comments were as follows for Institutions:

Focus on creating value by investing in industry and improving efficiency Build a conduit for the rest of the world to invest here

To innovate in the future, the respondents identified that new technologies and new practices should be employed. The specific comments were as follows for New Technologies and Practices:

Embrace “joystick technologies” to create the comfortable workplace for young workers (i.e. adapt the technology to the workforce, not vice versa)


Use experimental lakes as a model for some forestry initiatives, and bring the world here to do research (which may be encouraged through rewards and incentives for investment)

Improve the system of wood tenure to allow entrepreneurs access to wood supply

Some types of sector innovation may require new or improved infrastructure to fully realize the opportunities at hand. The specific comments were as follows for Infrastructure:

Install high-volume power infrastructure to export energy from biofuels

The individuals who will begin new businesses and attract new investment to the region are the entrepreneurs that will help build the forestry sector in the future. The specific comments were as follows for Entrepreneurship and Investment Attraction:

Aggressively woo & prospect entrepreneurs Increase the number of forestry entrepreneurs Cultivate entrepreneurial champions Connect information with entrepreneurs to drive job creation Reinvent ourselves to pursue opportunity – move with the change Break mid-career people out of their comfort zone to become entrepreneurs Develop a program like SEB, but without the EI links Let some businesses fail if they can be replaced by more innovative and more

successful ones (new and better alternatives)

Side Discussion: How can we improve access to the wood supply?

A recurring theme in the discussions concerned the availability of fibre or wood supply (or more particularly, the lack thereof). With supply controlled by a relatively small group of large corporations intent on holding it, there are significant obstacles facing the value-added sector in general and would-be entrepreneurs in particular. Issues raised as part of this Supply discussion included the following:

Tap into the unused portion of the existing wood supply Change outdated government management models Find better ways to share the pie Provide incentives to share the pie Adopt a “use it or lose it” approach to the existing supply Study the Finnish model, where there are more foresters per hectare than

anywhere else in the world

Question Three: Which of these actions could be led by the NFIC?


The final question that the community consultation addressed was defining role for the Northern Forestry Innovation Centre as the actions plans are developed and implemented. Several opportunities emerged from these discussions.

The respondents indicated that a facility where inter-related groups can meet to discuss or network should be provided by the NFIC. The specific comments were as follows for Networking Centre:

A venue for small business to access senior levels of government and industry

An opportunity for the sector to speak together A place to negotiate government partnerships for incentives to

entrepreneurs A place to build partnerships within the community A place to bring entrepreneurs and ideas together

Another important role for the NFIC that was brought forward was the concept that the NFIC could be an enabler of knowledge for the value-added forest industry sector. The NFIC could be mandated to be a supplier of knowledge regarding new technologies and best practices for the industry. The specific comments are as follows for Conduit for Knowledge, Technology and Best Practices:

Collect the knowledge of the world and use it locally A venue for introducing new technologies and new practices to the

local market A centre for sharing attributes, innovations and products A place to introduce change A place to access knowledge and advice for new opportunities A centre to promote better resource utilization A place to be visionary, and then move to action

Another opportunity for the Centre is to provide forest-related training and educational resources for local community. The NFIC can facilitate increased skill levels among local labour and provide important business training for entrepreneurs. The specific comments were as follows for Training Facility:

A location to provide training for increased entrepreneurship, multi-skills and flexibility to the sector workforce

The NFIC was identified as an ideal location to market the products being offered and to provide outside vendors a venue to view the local strengths in the forestry sector. The specific comments were as follows for Marketing Tool:

A venue for trade shows Promote unique local strengths and opportunities A showcase of local expertise and technology


The final potential role that the respondents identified for the NFIC was employing the institution to attract new investment. The specific comments are as follows for Investment Attraction Tool:

Open doors for new partners who will bring new investment dollars A centre of trade and investment activity

10.2 Appendix B – Finland and Finnish Trade InsightsOverall, what is the Finnish perception of doing business in Canada?

It is easy to find information and facts concerning Canada Probably most people here have some type of close or (not always close)

relatives there which also helps keep Canada known Finns also are aware of the forestry industries impact on the Canadian

economy because this may have long reaching effects in Finland People I have spoken to are very open to Canada and would prefer doing

business there before USA Finns want to do business in Canada, however most small to medium

companies are concentrating on more “local” markets like Sweden, Russia and the Baltic states

If a good enough argument can be made, they will listen and potentially act on doing business in Canada.

Do you have any thoughts about how strong or how innovative the forest industry is in Finland, and how this might compare to the industry in Canada?

Historically the innovative side in the Finnish mechanical wood industry has been strong (but could have been stronger... perhaps it stems from the fact the unwillingness of Finnish companies to work together). The innovations perhaps are focused on improving the bulk and the production side. With better quality products = better prices.


Machinery and equipment are for sure top quality and able to produce high capacities fast and with quality

One area that was perhaps forgotten was the innovative new products, and our good neighbours noticed and made e.g. sawmills in Finland unable to compete but then again, the large corporations could not change their operations to begin making smaller qualities of specialty items, but one special product is the laminated wood.

In the small and mid-sized sawmills, the quality products of Finland will be in their hands to produce and grow with

Also new innovative products like pressed wood (Diamond) will not take off fast due to the conservative thinking in the USA or Sweden

The competition from Russia has forced the Finnish companies to start rethinking their strategies in new products

Compared to Canada, I would say in the machinery and equipment side we have more innovative ways of getting the raw materials to the market in a more competitive way

The Forest Industry in Finland is quite advanced. With their culture of innovation, and high R&D activities, there are many interesting processes and companies there

If Wood Tech is successful in Canada, could this be used to encourage other forest industry companies to consider doing more business in Canada?

Success stories are always interesting and makes the threshold always lower for challenges

I believe the SME companies would have interest in creating new projects... they may have more will power and be hungry for growth

I will have to hear more about Wood Tech before answering this one.

Are you aware of any forest industry companies that might be interested in Canadian opportunities (import, export or joint venture)?

Here I have to be careful, it would take your embassy in cooperation with different organisations to market and raise awareness...a quick market research would also help...but Canada does have an advantage

It’s Canada and yes, I could research this further Last fall, a simple survey found 35 companies from our region interested in

Canada...we are in the process of making a more complete survey in general and I will see the findings from that. (with the new EU funding period starting we want back ground info to help us with the different projects)

Yes, I am currently speaking to a number of forest industry companies who are interested in Canadian opportunities.


Northwestern Ontario has strong ethnic and historic ties to Finland. Does this offer any advantages when it comes to working with Finnish forest industry companies?

Yes, to some extent, but Finns have not been like other nationalities where they know how to use local immigrants

Yes there are those who moved there... but I think Canada sells itself anyhow compared to USA. But it would be an advantage!

I’m not sure of the advantage of this…I guess they could potentially see the example of the Finns already in Canada and that may give them more confidence to venture into this opportunity

Rather than ethnic and historic ties being the main driver, the companies would be more interested in actual business possibilities and potential.

Do you think Finnish companies would prefer to deal with individual Canadian companies or communities on forest industry issues, or would they prefer to be engaged by a “Northern Forest Innovation Centre” that would represent the entire industry in a particular region of Canada?

In general, I think they prefer not using the middleman, but then again, they do not always know that this type of organisation might be available...

What you are suggesting is in my opinion perfect, but how do we guarantee that the right people would be hired? That is the bottom line... get the wrong people and it will not work. In our small region of Finland, the companies are slowly learning to contact us first to see if we would have connections somewhere – but this is after 8 years!

I would have to know more about the Innovation Centre being proposed, but in theory it sounds like a good entity to be engaged with

Finnish companies are interested in business… if the Innovation Centre can provide that, great… if not, then working with individual companies would be more advantageous


10.3 Appendix C – Duties of Staff in a Standard IncubatorAdapted from “Incubator Staffing: Basics and Beyond” by Meredith Erlewine in A Comprehensive Guide to Business Incubation (2nd edition, 2004).

a. Serving Clients I. Technical Assistance

1. Help write and create business plans2. Help client market their products to a targeted audience3. Counsel clients on business topics ranging from marketing to

management teams4. Provide reception and clerical services5. Create and monitor work plans and benchmarks for clients6. Assist in acquiring financing for clients7. Monitor clients needs and adjust accordingly

II. Special Programs1. Instruct or provide on-site training programs (marketing, taxes,

accounting, etc.) for clients and local entrepreneurs2. Create and manage loan programs and serve on loan review

committees3. Manage operation of resource centres such as computer labs, training

rooms, libraries, and multi-media centres


III. Networking Activities1. Link clients with banks, angel investors, and venture capitalists. Foster

these relationships for future incubator clientele2. Network for and with clients by managing working relationships with

research office of universities and colleges; key industry leader in the area; and trade, civic, and professional organizations

3. Recruit volunteers4. Build a network of professionals to serve as a resource base

(mentorship program) for clients; develop client advisory boards; negotiate fee schedules and manage those relationships

5. Manage interns\co-op students and assign projectsIV. Client Attraction and Selection

1. Seek out potential clients for the incubator program2. Screen clients and assist the selection committee3. Negotiate lease terms4. Track clients through admissions procedures

b) Incubator Program and Financial Management

I. Financial Management1. Make major purchasing decisions2. Write grant proposals3. Raise funds for the incubator4. Prepare and monitor annual budgets5. Manage incubator’s finances6. Develop and implement a fee system for incubator services7. Map a plan for self-sustainability

II. Program Management1. Write and refine business and strategic plans for incubator program,

including budgets, new initiatives, mission goals, and cash flow projections (in co-operation with and by approval of board of directors)

2. Implement ways to measure the program’s success (in co-operation with and by approval of board of directors)

3. Organize board meetings and retreats and serve as staff liaison to all board and committee activities

4. Meet with board of directors and prepare monthly and quarterly reports for board of directors

5. Handle personnel matters: hire, terminate, administer performance and compensation reviews, assign tasks, write job descriptions, and supervise incubator staff

6. Manage client disputes and complaints


c) Administrative Program/Support

I. Administrative/Office Assistance1. Calculate charges for clients’ rent and services used; prepare monthly

client billing; collect payments and issue receipts2. Monitor delinquent payments3. Handle account receivable/payable4. Provide clerical support for incubator5. Generate internal announcements6. Provide reception services for incubator staff7. Process client lease agreements8. Prepare bank deposits9. Maintain payroll records10.Develop and maintain databases (mailing lists, email lists)11.Sort and route mail; prepare bulk mailings12.Provide training on the phone and computer systems, copier, fax

machines, etc.13.Respond to public requests for information

II. Facilities Maintenance1. Maintain and repair major equipment and infrastructure: plumbing,

heating, machinery, etc.2. Coordinate maintenance staff or outside maintenance contractors3. Perform janitorial duties4. Perform grounds maintenance: mowing, planting, etc.5. Develop security procedures for the facility6. Prepare signage7. Oversee remodelling, construction, and expansion projects

III. Computer System Support1. Manage and trouble shoot computer systems2. Handle backup of important databases3. Tap community and client knowledge/skills for reduced fee or pro-bono

services4. Maintain web site

IV. Marketing/Public Relations1. Write copy for design and marketing brochures, advertisements,

newsletters, press releases, and other materials2. Conceive marketing strategies for incubator and its programs3. Prepare web site content4. Plan special events/media opportunities5. Serve as incubator’s public representative (give speeches and attend

community events, etc.)6. Develop and maintain media contacts


10.4 Appendix D – Examples of Programs to be Delivered through and Incubation Program

Training and Education Programs Seminar and training programs specific to business development needs (with

the potential to offer these programs in a meeting\training area at the facility, via group teleconferencing\videoconferencing, or via online training)

Business plan development and writing techniques Promotional strategy Sales techniques Management Information Systems Team building Cash flow statements Income statements Balance sheets Budget forecasting International market research Public Speaking


Effective research techniques for the business development sector Market research: Industry, Consumer, and Competition Breakeven analysis Cost analysis of business needs (technology, infrastructure, staffing) Commercialization planning Client tracking and record systems

Specialized regulatory assistance for the business development sector

Counselling programs for entrepreneurs by Director\Staff at the generator

Access to interactive media focused service providers Lawyers Accountants Patent Officers E-commerce specialists International trade\export and import specialists Financial management

Human resources management Staffing recruitment and retention Employee benefits Payroll administration Workers compensation and insurance requirements Training employees

Economic development advice and support Investment capital programs to attract angel investors Online entrepreneur/investor matchmaking program Catalogue of potential angel investor interests Presentation coaching Workforce development and training programs Graduate recruitment programs Business network development Funding and grant library\database development Business planning library Business sustainability programs Market gap analysis New product development workshop Technical writing training

Networking program(s) between member clients in the facility

Shared administrative services program


Clerical\bookkeeping help Data entry services Daycare services Shipping\Mail room support Photocopying\Fax services Voicemail/electronic mailbox training Telephone equipment Notary services Conference room/media presentation rooms Group purchasing program Annual/Semi-Annual/Quarterly entrepreneur exhibition Furniture rental Publishing services

Financing Microloan\Pre-seed financing program Pre-loan application assistance Loan guarantee programs Equity and Royalty financing programs Development of a database of government assistance programs Export financing development Angel investor program Venture capital investment program Infrastructure leasing program Tax credit programs

Shared multi-media\computer hardware and software program

Access to resource libraries and specialized databases of information

Assistance with technology commercialization Innovation assessment Prototype development Assistance with intellectual property development Commercialization education seminars and workshops Government regulations Technology assistance grants Early stage investment credits

Pre-incubation services Assessment of business plan Idea/Innovation evaluation Entrepreneur/team evaluation Microloan financing for business start-up


Post-incubation services Relocation assistance Advisory service board assistance E-networking Access to education and training programs

Mentoring Programs Advisory board network One-on-One Mentoring E-mentorship program Mentor recruitment Mentor training and guidance Relationship building programs between mentor and mentee

Graduation\Exit strategy program Real-estate opportunities Funding\Investor opportunities New market development Real costs of support services


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